Oral Answers to Questions

NORTHERN IRELAND

The Secretary of State was asked—

Sectarian Crime

Nicholas Winterton: If he will make a statement on sectarian crime in Northern Ireland.

Paul Goggins: Before I answer Question 1, the whole House will want to join me in expressing sadness and sympathy for the family and friends of the seven family members, including five children, who perished in the fire in Omagh yesterday. I reassure all hon. Members that a full investigation will take place into the cause of that tragic event.
	The total number of recorded sectarian crimes in Northern Ireland for 2006-07 was 1,217—some 17 per cent. lower than the figure for the previous year.

Nicholas Winterton: I am sure that the whole House joins the Minister in his expression of grief on behalf of the family of those who were killed.
	I am deeply concerned that a young man in Northern Ireland was brutally beaten to death—every bone in his body broken—and that two policemen, one in Londonderry and one in Dungannon, have been shot and badly wounded. Does not that indicate that sectarian crime is rearing its ugly head again? Is not it important that the Administration in Stormont act fiercely against such crime? What are the Government doing to help the coalition Administration in Northern Ireland overcome sectarianism, which appears to be raising its head again?

Paul Goggins: Any crime motivated by hatred is to be condemned. The hon. Gentleman will have noticed that condemnation of the Quinn murder and of the attacks on police officers have come from all quarters in Northern Ireland. All political leaders have made clear their unequivocal condemnation of the events and implored the public to come forward with information that can be turned into evidence that will stand up in court and see these people where they belong—behind bars. The Quinn murder and the attacks on the police officers have shown a community in partnership with law enforcement to a level that has never been seen before in Northern Ireland. That is an encouraging sign for democracy and peace in Northern Ireland.

Gregory Campbell: Further to the issue of the continuing sectarian attacks, will the Minister outline what the political consequences would be if condemnation of the shooting was forthcoming—as he said, it has been, albeit not from the Member of Parliament for the Dungannon area—but not sufficient information or evidence to prosecute those who carried out the attacks?

Paul Goggins: There is an ongoing police investigation into the issues that I have mentioned. Furthermore, the Independent Monitoring Commission reports regularly on such matters. A distinguishing feature of the last few weeks has been the way in which the political parties in Northern Ireland have been drawn together in their condemnation of the dreadful events and their determination to make democracy work.

Alistair Carmichael: May I associate myself and my party with the expressions of condolence with which the Minister opened his remarks?
	Does the Minister accept that the conflict transformation initiative has an important role in tackling sectarian crime, and that the administration of funds from the initiative is a wholly devolved matter? What representations did his Department make to the Minister of Social Development before her recent decision to withdraw funding from a programme because of concerns about possible links between it and the Ulster Defence Association?

Paul Goggins: The conflict transformation initiative is a devolved matter, and it was for the Minister of Social Development to decide whether to continue to fund the organisations involved. I had discussions with the Minister of Social Development, because one of the criteria that she set in her decision on funding was in relation to decommissioning, which remains a matter for my right hon. Friend the Secretary of State and me rather than being a devolved matter. We have always been clear, however, that the issue concerned was entirely for her to decide, and she has decided.

Owen Paterson: On behalf of Her Majesty's official Opposition, I fully endorse the Minister's comments on the terrible tragedy in Omagh, and we send our deepest sympathies to the relatives of those involved.
	In the light of the hideous murder of Paul Quinn, the two attacks on policemen in recent days and the refusal of loyalist paramilitaries fully to decommission, the Minister of State will agree that the key to a stable peace is for local communities to work with the police at all levels. What additional steps does he propose to improve that engagement?

Paul Goggins: The strong message from my right hon. Friend the Secretary of State and me, from the Chief Constable, and from political leaders in Northern Ireland in the wake of the events that the hon. Gentleman outlines has been that the community should come forward, stand shoulder to shoulder with their police officers, and ensure that the small number of people who are responsible for those dreadful events are brought to justice and put behind bars.
	I believe that in recent days it has become ever clearer that there is a determination in the community to provide such evidence and to come forward with statements. Only yesterday, during my visit to Dungannon, the police commented to me on the unprecedented co-operation from the community, along with an absolute determination among front-line police officers to ensure that those responsible are brought to justice. I think we should all be encouraged by that determination.

Owen Paterson: Does the Minister agree that the police must focus every existing resource on defeating criminal organisations? Given the enormous load imposed on the police by the continued retrospective inquiries, would he consider changing police priorities to allow the police to concentrate more resources on current dangers until the fuller co-operation of local communities is more evident?

Paul Goggins: Of course, every pound spent on investigating the past is a pound not spent on policing the present. I think we should emphasise the importance of dealing with the problems of the here and now. However, we have commitments in relation to inquiries, and they will continue to be honoured. We also have commitments in relation to the funding of policing in Northern Ireland, and we will continue to honour those as well.
	Another important feature of recent times that has been evident to me, as police Minister, is the high level of co-operation between the Police Service of Northern Ireland and the Garda Siochana, which is essential in bearing down on the remaining criminality in Northern Ireland.

Paramilitary Groups

Andrew MacKay: What recent assessment he has made of the activities of dissident republican groups in Northern Ireland; and if he will make a statement.

Nadine Dorries: What recent assessment he has made of the activities of loyalist and republican groups in Northern Ireland; and if he will make a statement.

Shailesh Vara: If he will make a statement on the security situation in Northern Ireland.

Shaun Woodward: Hon. Members will be aware of the report published last week by the Independent Monitoring Commission that outlined the activities of all loyalist and republican groups, but I am sure they will want to join me in condemning the two attacks in the past week on two police officers, Paul Musgrave and Jim Doherty. Those cowardly attacks are in stark contrast to the professionalism and dedication of the PSNI.

Andrew MacKay: I endorse the Secretary of State's remarks about the attacks on the two police officers. Is he satisfied, first, that new police recruits are being given the right training to avoid assassination attacks and, secondly that mainstream republicans are really coming forward and helping the police to deal with dissident republicans who might well have been responsible for those two attacks?

Shaun Woodward: The answer to the first question is yes, I am satisfied, but that is of course a matter for the Chief Constable. I regularly discuss these matters with him, and he has never indicated to me that it is a problem. As for the second question, I think we must look at the immediate statement made by republicans in response to all the attacks that have taken place in the past few weeks. They have been unequivocal in their condemnation of the attacks and have, with absolute clarity, asked everyone across the communities to come forward with evidence.
	I can also tell the right hon. Gentleman that I have had discussions with the Minister for Justice, Equality and Law Reform in the Republic. He tells me—as, indeed, does the Chief Constable of the PSNI—that in all three of the investigations that are under way, there is an unprecedented level of co-operation by the public in all communities. That stands in marked contrast with the position just a few years ago, and is being encouraged at every level of leadership in Sinn Fein.

Nadine Dorries: Does the Minister agree that there is a difference between decommissioning and putting weapons beyond use? The Ulster Freedom Fighters have said that they will put their weapons beyond use, but if stability and peace are truly to exist in Northern Ireland do we not need to see the destruction of all weapons and full decommissioning?

Shaun Woodward: The hon. Lady is absolutely right. When it comes to decommissioning, I think that every Member would like to see every weapon put beyond use and destroyed this evening—not tomorrow, not next week, not next month, not next year. The fact is, however, that decommissioning is a process. I am glad to report that groups such as the UDA are now engaging with the Independent International Commission on Decommissioning in a way that they have not done before. This weekend's statement by the UDA is to be welcomed, but I agree with the hon. Lady that—and I think that all Members will agree with this—it will be actions, not words, that count. We want to see these weapons decommissioned, and decommissioned now.

Shailesh Vara: The recent monitoring commission report said that individuals and communities have suffered a lot as a result of paramilitarism. What do the Government propose to do to help those individuals and communities to rebuild themselves and their society?

Shaun Woodward: There has undoubtedly been a great deal of suffering in communities during nearly four decades of troubles in Northern Ireland. However, it is clear that people in Northern Ireland are now living in a new era. The activities of a very small, limited number of people are being entirely condemned by every decent person north and south in Ireland. A number of things can be done to bring the communities out of the grip, in some remaining areas, of paramilitary activity, but part of that work is now the devolved responsibility of the new Administration and the Department for Social Development. I commend the work that is being done by Minister Ritchie to help those communities that are in the grip of paramilitary activity to come out of it. In the end, co-operation between all of us across the community, the Government here and the Government in Northern Ireland will ensure that we can help everyone to leave the past behind.

Mark Durkan: All of us would wish to associate ourselves with the expressions of grief and shock at the Omagh fire tragedy.
	I join the Secretary of State in condemning the murderous attacks on the two police officers. One of them was on a constituent of mine and the attack happened while he was taking a child to school. Does the Secretary of State agree that, by its violence and by the vicious terms of its statement, the Real IRA is showing that it is out not just to attack and threaten individual police officers, but to intimidate the wider public, particularly the nationalist public, who are increasingly demonstrating that they see the PSNI as acceptable, accessible and fully accountable—unlike the Real IRA, which they totally reject?

Shaun Woodward: I had the opportunity yesterday to speak to the hon. Gentleman's constituent, Mr. Doherty, who was wounded in the attack last week. He suffered considerable damage, but he is in very good spirits and he is a great example to everyone of stoicism and commitment to the police force. He said to me last night that he could not wait to get back to work. I hope that he does not return too quickly and that he has some time with his family, who, we must remember, are also innocent victims of such attacks.
	The hon. Gentleman makes an important point about the community. The Chief Constable tells me that we are seeing more co-operation from the community to try to bring those criminals to justice. This is going to be a choice for the community: we can leave the past behind, or we can move forward into a new future. That new future means that we have to support witnesses who come forward. Again, I am glad to say that the Chief Constable has made the position clear. He says that there is more co-operation than ever before from witnesses, and, critically, that he will give every protection he can to ensure that those witnesses can produce signed statements, that those signed statements can go into court and that the limited number of criminals who commit such crimes will be brought to book and put in jail, where they belong.

Patrick Cormack: I entirely endorse what the Secretary of State has just said and accept that there has been real and commendable progress since the Select Committee on Northern Ireland Affairs produced its report on organised crime last July, but is it not still very disturbing that, clearly, a number of former paramilitaries are involved, are intimidating people and are taking part in crimes such as fuel smuggling in particular?

Shaun Woodward: As the Minister of State said earlier, any crime must be condemned. Last year, the hon. Gentleman's Committee produced a very important and useful report on organised crime. It rightly identified a number of problems. Criminality, of course, remains a problem. However—I was discussing this with the Minister for Justice, Equality and Law Reform in the Republic yesterday—there is no question but that the unparalleled levels of co-operation between the communities, the Gardai and the PSNI are leading to a net being drawn more and more tightly around those who would peddle their criminality. Whatever disguise they may be using, they are criminals. It is the determination of the Chief Constable and the commissioner in the south to close the net on those people. I am glad to say that we are seeing that in action now.

Jim Devine: In welcoming Sunday's UDA statement, will my right hon. Friend join me in urging the Red Hand Commando to follow suit?

Shaun Woodward: I entirely agree: it is extremely important that not only that paramilitary group but all paramilitary groups follow suit. I can only reiterate what I said earlier: decommissioning should happen now, not next week or next month. We want all the weapons to be handed in, we want an end to criminality, and we want the people of Northern Ireland to be allowed to have the peaceful and prosperous future that everyone else can enjoy.

William McCrea: In the light of the statement of IMC member John Grieve about the murder of Paul Quinn, will the Secretary of State categorically assure the House that no stone will be left unturned in exposing Paul Quinn's murderers? They must be brought to justice, no matter how unpalatable that might be to some, and irrespective of any political consequences. Will the Secretary of State also tell the House that the Government will demand a clear statement that the IRA army council will be totally dismantled?

Shaun Woodward: As the hon. Gentleman knows, there is an ongoing investigation into the crime he mentions. However, I can say this: I was, of course, aware of John Grieve's statement of the beginning of this week, and I raised it yesterday with the Minister for Justice, Equality and Law Reform who told me that there is no information available to the Gardai suggesting that the attack was authorised by, or carried out on behalf of, any paramilitary grouping. I can, however, reassure the hon. Gentleman that nobody is above the law, and I am absolutely prepared to give him this commitment: this Government and the Irish Government believe that whoever did this needs to be investigated and charged in full accordance with the law, and brought to book.

Adrian Bailey: The UDA statement of the weekend is obviously welcome, but it is relevant in the context not only of paramilitary violence but of the level of overall criminality in the Province. What is my right hon. Friend's assessment of the potential impact of that statement on criminality in Northern Ireland?

Shaun Woodward: I refer my hon. Friend to the 17th report of the IMC, which looked at such issues. It was extremely important that the UDA statement called on all its members not to be involved in crime and to withdraw immediately from criminality. Let us be clear that such organisations have been front organisations for intolerable levels of crime, racketeering, prostitution and drug selling, which have brought destruction to entire communities and ruined the lives of young people. We have seen too many young people lose their lives as a consequence of the activities of such groups. I welcome the UDA statement—I take it at face value—but, in the end, it is essential that the House recognise that actions and not words will be what count. We want the UDA to ensure that its commitment is translated into action on the streets.

Jeffrey M Donaldson: Will the Secretary of State assure the House that the Police Service of Northern Ireland will receive the resources it needs to deal with the dissident republican threat? In addition to evidence gathering, we need a proactive approach to prevent such attacks in the future, which requires more police officers on the streets and more resources for the PSNI—not a cut in the policing budget, as is envisaged.

Shaun Woodward: I acknowledge and welcome the important work that the right hon. Gentleman does with the PSNI. The PSNI budget for the next three years is a fair settlement, and it represents an increase. Let us also look at the numbers on the ground: in Northern Ireland there is one police officer for 220 of the population. We know why that was and is necessary, but I am sure that the right hon. Gentleman would agree that many other Members would love their constituency to have the high number of officers that the Chief Constable in Northern Ireland enjoys. The Chief Constable needs them, but it is right that we continue to ask him to justify why we should spend so much money on the PSNI. It is money well spent, but we must ensure that there is value for money.

Public Expenditure

Peter Bone: What public expenditure per person is planned in Northern Ireland in each of the next five years.

Shaun Woodward: Government spending plans for Northern Ireland for 2008-09 to 2010-11 were set out in the 2007 comprehensive spending review by my right hon. Friend the Chancellor.

Peter Bone: I am sure that many Members of the House will welcome the fact that Northern Ireland receives more public expenditure per person than the UK average, but for the past five years that proportion has been declining relatively, whereas Scotland's has been increasing. What is the Government's policy towards the relative merits of public expenditure within the union?

Shaun Woodward: Northern Ireland did, indeed, receive a very good settlement from my right hon. Friend the Chancellor. Again, I commend the Finance Minister in the new Administration in Northern Ireland for the extremely good way in which he has handled the settlement to ensure that Departments in the new Administration and Executive are able to fulfil their commitments to public services. On the specific question that the hon. Gentleman asks, the budgets are derived from the Barnett formula, which has served the United Kingdom well for 25 years. It is, of course, a needs-based assessment of priorities by the Government for the Administrations, and we believe, as statements made by members of the Executive in Northern Ireland suggest, that the settlement for Northern Ireland for forthcoming years is a fair and just one.

Chris Ruane: Does my right hon. Friend agree that the challenge for Northern Ireland is not over-reliance on public investment but attracting private sector investment, that the historic peace settlement that this Government have introduced has laid the foundations for that and that evidence of this success is the massive increase in house prices in the north over the past two or three years?

Shaun Woodward: My hon. Friend makes an important point. First, we must understand that because of 40 years of troubles, it has been difficult to re-engineer the Northern Ireland economy in the way that has happened in the rest of the United Kingdom over the past two or three decades. That is why public expenditure represents about 70 per cent. of Northern Ireland's economy, which compares with a figure of 41 per cent. in England and stands markedly against 34 per cent. in the Republic. He is right to draw attention to that. The new Administration in Northern Ireland have plenty of scope to regenerate their economy by allowing some of those sectors in the public area to be open to more competition from other areas than they have been in the past decade or two.

Drugs

Stephen Crabb: What resources have been allocated to the police to help identify those paramilitary groups involved in drug trafficking and selling.

Paul Goggins: May I begin by offering my sincere condolences to the family of Dean Clarke, whose recent tragic death has brought home to all of us the harm that illegal drugs do to families and communities? The Police Service of Northern Ireland will continue to prioritise action against drug dealers and traffickers, irrespective of their background or motivation.

Stephen Crabb: I thank the Minister for that reply. Given that the paramilitary organisations on both sides of the divide that have diversified into drug trafficking, with all the devastating consequences for communities that the trade entails, have largely been able to maintain their political and military structures, which pin down those communities in fear, how concerned is he that a real battle needs to be fought against drugs in Northern Ireland and that it is being lost?

Paul Goggins: I do not agree that the battle is being lost. Of course, this is a matter of concern to me, whatever the background and whatever organisation is behind the trafficking and selling of drugs on the streets of Northern Ireland, but in fact the number of arrests for drug offences increased by 20 per cent. last year in Northern Ireland and the number of class A drug seizures increased by 58 per cent. This will remain a priority for the police, but, of course, they need the co-operation and help of the community to deal with the problem.

Laurence Robertson: Given that the recent Independent Monitoring Commission report identified a number of paramilitary organisations that have changed the emphasis of their activities from paramilitary to drug dealing—Oglaigh na hEireann, the Continuity Irish Republican Army, the Irish National Liberation Army, the Ulster Defence Association, the Loyalist Volunteer Force and the Ulster Volunteer Force—and given that the street value of seized drugs in Northern Ireland in 2006-07 amounted to £22.5 million, what prospects does the Minister see for the devolution of policing and criminal justice?

Paul Goggins: I am confident that those in the devolved Administration in Northern Ireland will share my determination to ensure that those who deal in illegal drugs are dealt with, the drugs are seized and they are brought to justice. The hon. Gentleman referred to the seizure last year of some £22 million worth of drugs, and that included a huge seizure of cannabis, the biggest ever in Northern Ireland, which again amply demonstrates the commitment of the police and others to bear down on that form of criminality.

Nuclear Power

Eddie McGrady: What discussions he has had with the Department for Business, Enterprise and Regulatory Reform on the proposed development of nuclear power sites in Northern Ireland.

Paul Goggins: I have had no such discussions, but my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform has consulted widely across the UK, including in Northern Ireland, on whether to give companies the option of investing in new nuclear power stations. No decision could be taken to site a nuclear power plant in Northern Ireland without the agreement of the devolved Administration.

Eddie McGrady: I thank the Minister for his reply. Is he aware that the Government chief scientific adviser, Sir David King, endorsed the proposals for five nuclear sites in Northern Ireland, two of them in my constituency? What representation has been made to the Northern Ireland Office by the Executive, and did the Executive make a submission on the issue of nuclear sites to the UK Government before the end of the consultation period on 10 October?

Paul Goggins: My right hon. Friend the Secretary of State has strategic responsibility for overall energy policy across the UK and he has organised two public consultations in Northern Ireland in relation to this question. I assure my hon. Friend that in any event it would require the express agreement of politicians in Northern Ireland before any nuclear power plant could be developed there.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Alistair Carmichael: If he will list his official engagements for Wednesday 14 November.

Gordon Brown: Before listing my engagements, I am sure that the whole House will wish to join me in sending our profound condolences to the family and friends of Lance Corporal Jake Alderton of 36 Engineer Regiment, who was killed in Afghanistan last Friday. He died in a tragic accident doing vital work in the service of our country, and we owe him, and others who have lost their lives, a deep debt of gratitude.
	This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Alistair Carmichael: I am sure that Members on both sides of the House will wish to associate themselves with the Prime Minister's expressions of condolence.
	Does the Prime Minister agree that the growing humanitarian crisis in Gaza, resulting from the closure of the border between the Gaza strip and Israel, is the most pressing concern to be addressed at the forthcoming conference at Annapolis? Will he make that the UK's first priority, and will he press the US Government to do the same?

Gordon Brown: I am grateful to the hon. Gentleman, who has taken a long-term interest in those matters. The 22 November meetings in Annapolis will be a unique opportunity to move forward the middle east peace process, and to bring together the possibilities for a viable Palestinian state with a safe and secure Israel. I hope that out of those meetings—and we will press for it—under the leadership of President Bush and with 22 Arab states involved, we will find a framework document that can be moved forward over the next year with a view to settling all the outstanding issues.
	The hon. Gentleman mentioned Gaza—let us not forget the west bank also—and if we can see tangible progress on security, the UK would be prepared to put a $500 million package of aid into the area, so that economic reconstruction can take place. We will call on the rest of the European Union and the US to join us in making it possible to show that prosperity can result from abandoning the violence of the past.

David Marshall: I congratulate the Prime Minister and everyone involved in Glasgow's successful bid to host the 2018 Commonwealth games. Does he agree that that will regenerate the east end of Glasgow in the same way as the 2012 Olympics will regenerate the east end of London? Will he therefore liaise with Glasgow city council and the Scottish Executive to ensure that that much needed regeneration does indeed take place?

Gordon Brown: I congratulate my hon. Friend, who has also been a prime mover in bringing the Commonwealth games to Glasgow. I also congratulate Glasgow city council, the Scottish Administration and all those who have played a part in securing the Commonwealth games for Glasgow. We now look forward to what I believe could be the best sporting decade in our country's history. We have the Olympics in 2012 and the Commonwealth games in Glasgow in 2014; I would like to see the rugby world cup coming to Britain in 2015, and England will bid for the 2018 World cup. It will be a great sporting decade, and I believe that everybody in our country will wish those proposals well.

David Cameron: I join the Prime Minister in congratulating Glasgow on winning the Commonwealth games. They will be a great success for our whole country. I also join him in paying tribute to Lance Corporal Jake Alderton, who died in Afghanistan on Friday. Our troops there are doing vital work and we all support them.
	Four months ago, the Home Secretary was told that thousands of illegal migrant workers had been given clearance to work in sensitive security posts. Why were the public not told?

Gordon Brown: Because the Home Secretary acted immediately. What she did was to put in place the security checks that mean that all new security workers are checked, and that all existing workers are going through checks. The checks will be completed by the end of the year. The Security Industry Authority wrote to employers in the middle of August to tell them that we were stepping up our checks. The checks are moving forward, and the likelihood is that they will be finished by the end of the year. Instead of just talking, she acted.

David Cameron: I did not ask about what the Government did; I asked about what the Home Secretary said. The Prime Minister's explanation is simply not good enough. People were not told because that would have been politically embarrassing, as the e-mails make clear. The Home Secretary was told that
	"any announcement about illegal migrant workers...would not be presented...as a positive story."
	Her private secretary said that the Home Secretary did not think that
	"the lines to take...are good enough for Press Office or Ministers to use to explain the situation."
	That is why the public were not told. Have not the Government been caught red-handed putting spin before public safety?

Gordon Brown: It is what we did that matters. I am sorry that the right hon. Gentleman says that it does not matter what we did. What we did is important to the security of this country. It is for employers, first of all, to check whether they are employing people who are in this country illegally. That is the first responsibility. The SIA is now able to do checks of existing workers, as well as new ones. I think that the House should know that when the Bill setting up the SIA was being discussed in the House of Commons, the Conservative spokesman said:
	"The Opposition's approach to the Bill is that it should not place unnecessary, overly complex, bureaucratic or burdensome regulations".—[ Official Report, 28 March 2001; Vol. 365, c. 980.]
	The regulations were necessary to protect the security of our country.

David Cameron: That is such a contrast with what the Prime Minister told us in May, when he said that he would be "frank about problems" and "candid about dilemmas". He has been neither. A simple question: will the Prime Minister say when he was told about the problem? When?

Gordon Brown: The Home Secretary has been dealing with it throughout the summer— [ Interruption. ] It is an operational question, and I am sorry— [ Interruption. ] I am sorry that the Leader of the Opposition puts so much onus on press releases. What matters is getting things done. We checked 6,000— [ Interruption. ]

Mr. Speaker: Order. Let the Prime Minister speak.  [ Interruption. ] Order. The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) has been quiet for a while, but he must stay quiet now.

Gordon Brown: We have checked existing workers as well as new ones. That process will be completed by the end of the year. The matter was the operational responsibility of the Home Secretary, and she took the right action.

David Cameron: Why will the Prime Minister not answer the simplest of questions? If he did not know, that is serious—but it is not the end of the world. However, does he not understand that if he does not answer a question like this, people simply will not trust him? So let me ask him again: when was he told about the problem?

Gordon Brown: The arrangements for checking— [Hon. Members: "Answer!"] The arrangements for checking had been announced to the House of Commons some months ago. The question was what happened when we tightened the regulations: that was the operational responsibility of the Home Secretary, and she took the action that was necessary. I am sorry that the Leader of the Opposition thinks everything should go through No. 10; the Home Office was responsible, and it took action.

David Cameron: Why does the Prime Minister not want to know about a major security lapse in our country? He promised us a new type of politics. He said that he would be open, he would be honest, he would be frank and he would be candid—yet today he will not answer the simplest of questions. Should not people conclude that everything he said about openness, candour and honesty was just spin?

Gordon Brown: The key issue is what is actually done, and we took action immediately in July, August, September and October. It is for that reason that the Home Secretary was able to report yesterday that the checks on existing workers will be completed by the end of the year. We did our duty—not press releases, but action.

Kevan Jones: Yesterday, the hon. Members for Newark (Patrick Mercer) and for Portsmouth, South (Mr. Hancock) and I hosted the parliamentary launch of the "honour the brave" campaign, along with Pearl Thrumble and Helen Gray, two mothers who have lost sons in Afghanistan. The aim of the campaign is to secure a medal for men and women who die or are injured in combat, so may I urge my right hon. Friend to use his good offices to try to ensure that the medal is awarded to those brave men and women, whose courageous families are also supporting their efforts to secure peace in Afghanistan and Iraq?

Gordon Brown: I join my hon. Friend in passing my condolences to the brave relatives of Private John Thrumble and Private Chris Gray who were both killed in Afghanistan in 2007. The whole House will honour all those who have given their lives in Afghanistan and those in Iraq who have laid down their lives for their country. On the question of whether a new medal is struck for those who have been killed or injured, it is first a matter for the military authorities to make a recommendation. The matter is being looked at with intensity in the Ministry of Defence. We look forward to hearing the recommendations that are made, and we will of course support them. I believe that the whole country wishes to honour people who have given their lives or who have been injured in the service of our country.

Vincent Cable: May I add my condolences to the family of Jake Alderton?
	This morning, the Chancellor wrote to me about Northern Rock and the Government's commitment to minimising the cost to the public purse. Can the Prime Minister confirm that the Government have now lent £24 billion of taxpayers' money to that small mortgage bank—twice the amount of public expenditure on primary schools every year, and four times the aid budget?

Gordon Brown: First of all, we are guaranteeing the deposits of savers—that is well understood—and we are bringing forward legislation in the House. That is absolutely the right thing to do, to move from the situation in 1982, when we guaranteed only 90 per cent. up to a certain amount, to guaranteeing 100 per cent. up to the amount that will be specified when the legislation is introduced. As far as Northern Rock is concerned, matters about what is actually happening within the company are obviously of commercial confidence. I gather that the stories in the newspapers this morning are about papers unrelated to the Treasury, the Bank of England or the Financial Services Authority, and only to Northern Rock itself. I cannot comment on those confidential papers.

Vincent Cable: The arguments about commercial confidentiality are absolutely bogus. Why should the taxpayer have rights inferior to those of the managers, directors and shareholders of the company? If the Prime Minister cannot tell me how much money has been lent, can he give the House an assurance that the loan will be paid back in full, with interest, in the lifetime of this Parliament?

Gordon Brown: I think the hon. Gentleman—to be fair—knows exactly what the situation is. Secured lending is being given in relation to Northern Rock, guaranteed against Northern Rock assets. However, that is a matter about the future of Northern Rock, and it would not be in the best interests of Northern Rock or its investors to speculate on possible buyers and other possible interest in the company. I hope that the hon. Gentleman agrees that such information should at the moment remain commercially confidential.

Clive Efford: May I add my sympathies to those of my right hon. Friend for my constituent Jake Alderton, who died in Afghanistan last week? I met the family this morning, and they are extremely proud of the work that Jake was doing. He was a credit to his family, to his regiment and to the country.May I also ask my right hon. Friend about youth unemployment? There are 810 young people in my constituency who are not in education, employment or training. Does he agree that that is an absolute disgrace? Will he reflect on how much that figure might be added to if it were not for education maintenance allowances? Does he further agree that, rather than suggesting that we might abolish that allowance, it is incumbent on every Member to ensure that we do everything possible to ensure that every 16-year-old is in education, employment or training and does not leave school for a lifetime of idleness and unemployment?

Gordon Brown: I agree with my hon. Friend. In addition to the major reforms that are bringing about more academies, more specialist schools and more trust schools, and the reform of the curriculum with the new standards and qualification authority, we are extending education maintenance allowances to enable more young people to stay on at school. We are raising the education leaving age to 18, as a result of the legislation that we are bringing before the House of Commons, for part-time and/or full-time training. At the same time, we are introducing diplomas that will have the status, we believe, to enable universities and businesses to back them. When Governments in the 1940s introduced the major education reforms—such as the 1944 Act—there was all-party consensus on them. I hope that even at this stage the Conservatives will reconsider their position, not only on education maintenance allowances and the new deal for young people, but on raising the education leaving age to 18. I hope that they will not a fall into the trap that they fell into on grammar schools. We want education for all, not educational opportunity just for a few.

Adrian Sanders: The Prime Minister will be aware that today is world diabetes day. Will he commit the Government to fulfilling the objectives of the UN resolution on diabetes passed last year, which commits itself to the prevention of that appalling condition, and to treating those who suffer from it?

Gordon Brown: I am grateful to the hon. Gentleman for raising the issue of research into diabetes. Over the next 10 years we will be spending £15 billion on medical research. One of the areas where research is most needed is in looking for both a cure and for better treatments of diabetes. We will support all the efforts of the voluntary organisations and the charitable groups that are looking to do more to cure that disease. I believe that over the next few years we can make enormous strides forward, and I hope that both the charitable world and Governments can do so together.

John Heppell: Does the Prime Minister agree that the British Government would be left isolated and without any credibility at all if, after ratifying a treaty on Europe that had the support of this House and another place, they then ignored the authority of Parliament and called for a referendum to renege on that treaty?

Gordon Brown: If Parliament ratified the European amending treaty and then other people decided that there should be a post-ratification referendum, that is the equivalent of renegotiating our membership of the European Union. I thought that Conservative Members—I know that 49 have signed a motion saying that there should be a post-referendum ratification—will look at the damage that that will do to business, to industry and to jobs in this country. They have found a new way of creating economic instability in our country, and I hope that the leadership of the Conservative party will desist from it.

Anne McIntosh: Given the rising price of food and the impact that that is having on hard-pressed families and hard-pressed farmers, what is the Prime Minister intending to do to secure a steady supply of food for this country, at reasonable prices, but with a stable income for our farmers?

Gordon Brown: The first thing that I can say to the hon. Lady is that I met the National Farmers Union on Monday, and I will keep in regular contact with it. We cannot but be impressed by the resilience shown particularly by sheep farmers in the light of the difficulties that they have had to face, as a result of foot and mouth and other diseases. As for inflation and the effect on food prices, let me just say that it is only by running a stable and strong economy that we will keep inflation low and ensure that people's living standards can rise—and that demands that we continue to pursue the policies that have given us stability and growth over 10 years.

Stephen Pound: Further to the Leader of the Opposition's comments about honesty and transparency, may I ask my right hon. Friend the Prime Minister whether he thinks that it would be morally right or legally possible for a political party in this country to be funded by a person who was not a resident of the United Kingdom?

Gordon Brown: No, it should not happen.

Greg Hands: The Prime Minister will be aware that his predecessor spent considerable effort trying to have Hammersmith resident Hani Youssef extradited to Egypt. Mr. Youssef appears on the United Nations list of those associated with, or belonging to, the al-Qaeda organisation. Can the Prime Minister tell us why the Home Office is considering Mr. Youssef's indefinite leave to remain in the United Kingdom?

Gordon Brown: The hon. Gentleman has raised a question about an individual; I shall look at it and write to him.

Louise Ellman: Is the Prime Minister satisfied with our controls on the circulation of hate material in our schools, now that a copy of "The Protocols of the Elders of Zion" has been found in the King Fahad academy in London, after Ofsted gave that academy a clean bill of health?

Gordon Brown: When I make my statement in a few minutes, I will come to an issue about propaganda of an extreme nature, designed to inflame tensions within communities, being circulated in schools. The Secretary of State for Children, Schools and Families is proposing that a group of head teachers should be brought together to look at what we can do in those circumstances, and report back about how the circulation of this unfortunate material can be removed.

John Hemming: In England in 2006, 4,160 children under five were taken into care and more than 60 per cent. of them—2,490—were adopted. However, in Scotland 574 left care and 373, roughly 64 per cent., went home to their parents. Can the Prime Minister explain why in England children under five who leave care get adopted, while in Scotland they go home to their parents?

Gordon Brown: Social work legislation in the two countries is, of course, different. I shall look at the figures that the hon. Gentleman has put before me. But as is known, we have made strenuous efforts to try to ensure that children in difficulty are given the proper upbringing, whether that is by returning to their parents or, where it is essential, by being fostered or adopted. I will continue to look at the matter, but the hon. Gentleman has to understand that social work practice in the two countries is different.

Chris Ruane: The Airbus factory in north Wales is the largest and most expansive factory in western Europe. In the past 10 years, Airbus has taken on 1,200 apprenticeships; it is the biggest apprentice trainer in the UK. Does my right hon. Friend agree that apprenticeships, along with opportunities in further education and schools and in the private and voluntary sectors, are the key to giving our 16-year-olds the best chance and start for adult life?

Gordon Brown: I congratulate my hon. Friend on the growing numbers of apprentices in his constituency. Ten years ago there were only 60,000 apprentices in the country; now there are 250,000. Our aim is to raise that number to 500,000 over the next 12 years. That is the biggest expansion in educational training opportunity that the country has seen, and I hope that all parties will be prepared to support the diploma, the raising of the age to 18, the growth of apprenticeships, more young people getting to university, and, of course, the reform of the curriculum that we are bringing about. That is education reform that is genuinely giving educational opportunity to all.

Peter Luff: What, precisely, has Lord Malloch-Brown done to deserve his grace-and-favour apartment?

Gordon Brown: Lord Malloch-Brown is a Minister of the Government, representing our country. With the experience that he brings from his previous role in the United Nations, he is helping in Darfur, Zimbabwe, Afghanistan and Pakistan. He is doing a great job for the Government.

Mike Hall: On Monday this week, Ronald Castree was convicted of the murder of Lesley Molseed 32 years ago. That conviction was possible only because we have introduced a national database on DNA, which the Opposition parties voted against. What does my right hon. Friend have to say to Members of the House who have been talking tough on crime this week, but when it comes to voting in the House, do not back that talk up?

Gordon Brown: The use of DNA has increased convictions for rape by a very high number over recent years. I hope that all Members of the House will reflect on this new evidence, which shows that where we are able to bring people to justice as a result of the use of DNA, that justifies the legislation that we have brought before the House of Commons. I hope that we can gain all-party support for that in future.

David Evennett: Will the Prime Minister join me in acknowledging the hard work of Bexley council, in partnership with Bexley police, in being tough on licensing issues in the borough? I know that he does not like answering questions, as we have already seen today in his responses to my right hon. Friend the Leader of the Opposition, but will he recognise the detrimental effect that his Government's Licensing Act 2003 is having on town centres in terms of antisocial behaviour, binge drinking and noise nuisance—and do something about it?

Gordon Brown: As the hon. Gentleman knows, a review of 24-hour licences is already under way. He may also want to know that I am meeting representatives of the retail industry over the next few days to talk about practices in relation to the selling and marketing of drink, particularly the dangers that befall teenagers as a result. I also want to meet representatives of the drinks industry to see what they are doing in relation to advertising and warning young people about the dangers of binge drinking. Yes, we will examine, as councils are examining, areas where young people congregate in numbers to drink, to see what can be done about that. I agree that we need to take action on this, and we are taking action.

Dennis Skinner: Does the Prime Minister agree that although 1992 will always be remembered for being the year of Black Wednesday, it was also the year of the Heseltine pit closure plan, which marked the end of every pit in the Derbyshire coalfield? Since that time, with a strong economy, we have already got 3,000 jobs on the colliery sites. Next year, with the opening of junction 29A, there will be another 5,000 jobs. We have dragged the area from the depths of Tory degradation and brought a new lease of life to the coalfields. That is what separates us from the Notting Hill mob.

Gordon Brown: Sometimes Conservative Members are in danger of forgetting that under their Government 3 million people were unemployed; they must not forget that under this Government we have reduced unemployment by 1 million, 300,000 single parents have found work, and we are reducing the numbers of people on incapacity benefit. We can do this only because we have stability and growth in the economy—something that never happened when the Leader of the Opposition was the economic adviser to the Conservative Government.

John Baron: The Prime Minister may be aware of a recent cross-party inquiry and report that examined whether our servicemen were put in danger's way when they were present at the British nuclear tests during the 1950s. Given that other countries have much better track records in recognising their duty of care to their veterans—including the US, which makes automatic compensation—will the Prime Minister meet me and the hon. Member for Norwich, North (Dr. Gibson) to try to progress this matter for the benefit of these dignified and loyal veterans?

Gordon Brown: I am grateful to the hon. Gentleman for raising that issue. Of course I will meet him and his hon. Friend— [ Interruption ]—I mean my hon. Friend. The Government recognise and are grateful to all servicemen who participated in the nuclear testing programme. Their service ensured that Britain was protected during the cold war. I have to say that well-documented procedures were in place to ensure the safety of participating servicemen, and most ex-servicemen were found to have had little additional exposure. However, if there is any new information to be brought to bear, I shall be happy to look at it.

Building Schools for the Future

David Taylor: What assessment he has made of the role of the private finance initiative in delivering the building schools for the future programme.

Gordon Brown: The selection of PFI as a procurement route for building schools for the future follows a detailed assessment using the Treasury's value-for-money guidance. Since 1997, 1,106 schools have been rebuilt or refurbished and £31 billion has been invested. Investment through PFI has delivered 275 of those rebuilt or refurbished schools—in other words, 25 per cent.

David Taylor: The building schools for the future programme is welcomed by all parties, but half of the eventual £50 billion cost is being financed by inflexible PFI schemes with exorbitant annual costs of more than £2,000 million for 25 years or more. Will my right hon. Friend explain why local authorities have to take, on behalf of schools, risks over which they have little control? What costs will fall on the taxpayer if PFI schools prove not to be sustainable and have to be closed prematurely?

Gordon Brown: I have to tell my hon. Friend that his area of Leicestershire has benefited from £60 million of investment in projects in education, health and other areas. It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model. It is because of PFI and the additional public investment we are prepared to make that we can look forward to every secondary school being modernised or refurbished, and a programme has now been brought in for primary schools as well. Of course, that would not have happened if we had followed the policies of the Conservatives, who want to cut investment in education and health.

Simon Burns: The Prime Minister has a justified reputation for striking fear into the hearts and minds of junior Ministers through his micro-control of everything that goes on in his Government and his control freakery. Why will he not answer the simple question asked by my right hon. Friend the Member for Witney (Mr. Cameron): when did he know about the problems in the Home Office?

Gordon Brown: This was a matter for the Home Secretary, who took all the action that was necessary, and she dealt with the problem in a calm, efficient and dignified way.

National Security

Gordon Brown: In advance of the national security strategy, which will be published in the next few weeks, and following the statement by the head of MI5 about the potential threat from UK-based terrorists, I want to update the House, as I promised in July, on the measures we are taking at home to root out terrorism and strengthen the resilience of communities to resist extremist influences following the incidents of 29 June and 30 June. As everyone in this House knows, to succeed, those measures will require not just military and security resources but more policing and intelligence, and an enhanced effort to win hearts and minds.
	First of all, let me thank the police, the security services and the armed forces for their vigilance, their service and their courage in facing up to the terrorist threat. The terrorist attacks in June revolved around an attempted bomb attack on a London venue where hundreds congregated, and a vehicle bomb attack on Glasgow airport. The conclusions today of the review by Lord West on the protection of strategic infrastructure, stations, ports and airports, and other crowded places, identify a need to step up physical protection against possible vehicle bomb attacks. That will include, where judged necessary, improved security at railway stations—focusing first on our 250 busiest stations most at risk—and at airport terminals, ports and more than one hundred sensitive installations.
	The report proposes the installation of robust physical barriers as protection against vehicle bomb attacks, the nomination of vehicle exclusion zones to keep all but authorised vehicles at a safe distance, and making buildings blast resistant. While no major failures in our protective security have been identified, companies responsible for crowded places will now be given detailed and updated advice on how they can improve their resilience against attack, both by better physical protection and greater vigilance in identifying suspicious behaviour.
	New guidance will be sent to thousands of cinemas, theatres, restaurants, hotels, sporting venues and commercial centres, and all hospitals, schools and places of worship, and it will include advice on training staff to be more vigilant. Up to 160 counter-terrorism advisers will train civilian staff to identify suspect activity and to ensure premises have secure emergency exits, that CCTV footage is used to best effect, and that there are regular searches and evacuation drills. From now on, local authorities will be required as part of their performance framework to assess the measures they have taken to protect against terrorism.
	We will now work with architects and designers to encourage them to "design-in" protective security measures to new buildings, including safe areas, traffic control measures and the use of blast-resistant materials. For that advice, I am grateful for the recommendations of the hon. Member for Newark (Patrick Mercer), whom I thank for his work.
	Following further work, we will report back soon on what more we need to do to strengthen security to protect against the use of hazardous substances for terrorist purposes.
	Just as we are constantly vigilant about the ways in which we can tighten our security, we must also ensure that the travelling public can go about their business in the normal way. In the most sensitive locations, for example, some large rail stations—and while doing everything to avoid inconvenience to passengers—we are planning additional screening of baggage and passenger searches.
	In the past few months at key airports, there has already been additional investment in new screening capacity and we have been able to review the one-bag-per-passenger rule. The Transport Secretary is announcing today that, as soon as we are confident that airports can handle the additional baggage safely, the restrictions on hand baggage will be progressively lifted. Starting with several airports in the new year, we will work with airport operators to ensure that all UK airports are in a position to allow passengers to fly with more than one item of hand luggage.
	The security budget, which is £2.5 billion this year, will rise to £3.5 billion in 2011. Because of the terrorist threat, the size of the Security Service, which was under 2,000 in 2001 and is 3,300 now, will rise beyond 4,000. That is twice its size of 2001.
	I can also report that we have now constituted dedicated regional counter-terrorism units, with, in total, more than 2,000 police and support staff. They are responsible for overseeing investigations into those who recruit terrorists and promote hate.
	From the Home Office budget, from now until 2011, an additional £240 million will finance counter-terrorism policing, which is focused as much on preventing the next generation of terrorists as on pursuing current targets. That will include additional funding for further training of our 3,500 neighbourhood police teams to deal with radicalisation in their local communities.
	The scale of our international effort is such that around £400 million in the next three years will be invested through the Foreign Office, the Department for International Development and the British Council to tackle radicalisation and promote understanding overseas. The Government will report back on action overseas with other countries to counter extremism when we launch the full national security strategy. I can also confirm that £70 million is being invested in community projects that are dedicated to countering violent extremism. So, in total, we are now investing nearly three times as much in security compared with six years ago.
	In line with the measured way in which we responded to the terrorist incidents in June, we will seek only new powers that are essential to the fight against terrorism. The forthcoming counter-terrorism Bill, which will be introduced shortly, will include stronger sentences for terrorist-related offences and, where terrorists have served sentences, new powers for the police to continue to monitor their activities.
	Asset-freezing is an important tool in the fight against terrorists buying weapons or using money for terrorist purposes. Sophisticated evidence gathering of financial transactions can both deny terrorists finance and locate the sources of terrorist plots. Current legislation makes it difficult for us to take preventive action, so the new Bill is intended to give new powers to ensure that we can use all available information to pursue those who finance terrorist attacks.
	In addition to measures to process terrorist cases more efficiently and reduce the time between arrest and trial—including 14 new specially protected courtrooms—a single senior judge has been nominated to manage all terrorism cases. There will also be a single senior lead prosecutor in the Crown Prosecution Service responsible for cases relating to inciting violent extremism.
	To ensure that we protect our borders and detect possible terrorist suspects, members of the new UK border agency will have the power, from January next year, to detain people not just on suspicion of immigration offences or for customs crime but for other criminal activity, including terrorism. Powers will also be given to airline liaison officers to cancel visas when justified.
	In line with the statement that I made in July, there will be one single primary checkpoint for both passport control and customs. The UK border agency, which will have 25,000 staff in total, will now apply controls at points of entry and exit on people and goods, into and out of the UK, as well as working throughout the world. The new agency will enable us to transfer intelligence from UK operations overseas to those making visa decisions, and to check biometrics taken from visa applicants against criminal and counter-terrorism records. Further details of the new UK border agency, which has been welcomed by the Association of Chief Police Officers, are published in the Cabinet Office report issued today. This will go hand in hand with what is increasingly necessary: biometric visas for all applicants from March next year, biometric ID cards for foreign nationals introduced from the end of 2008 and a strengthening of the e-borders programme, with the contract to incorporate all passenger information awarded today.
	With repatriation arrangements for foreign terrorist suspects agreed with Jordan, Lebanon and Algeria, work is under way with a number of additional countries, with a view to signing new agreements for deportations. In addition to the nine foreign nationals recently deported under immigration powers on grounds of national security, a further 24 foreign nationals are currently subject to deportation proceedings on national security grounds and 4,000 foreign prisoners are likely to be deported this year.
	All faith communities in the UK make a huge contribution in all spheres of our national life. They are integral to our success as a society. And as we found, listening to all communities in and after June, the vast majority of people of all faiths and backgrounds condemn terrorism and the actions of terrorists. But the objective of al-Qaeda and related groups is to manipulate political and humanitarian issues in order to gain support for an agenda of murder and violence, and deliberately to maim and kill fellow human beings, including innocent women and children, irrespective of their religion. We must not allow anyone to use terrorist activities as a means to divide us or isolate those belonging to a particular faith or community.
	To deal with the challenge posed by the terrorist threat we have to do more, working with communities in our country, first, to challenge extremist propaganda and support alternative voices; secondly, to disrupt the promoters of violent extremism by strengthening our institutions and supporting individuals who may be being targeted; thirdly, to increase the capacity of communities to resist and reject violent extremism; and fourthly, to address issues of concern exploited by ideologues, where by emphasising our shared values across communities we can both celebrate and act upon what unites us. This will be achieved not by one single programme or initiative and it will not be achieved overnight. It is a generational challenge that requires sustained work over the long term, through a range of actions in schools, colleges, universities, faith groups and youth clubs, by engaging young people through the media, culture, sport and arts, and by acting against extremist influences operating on the internet and in institutions from prisons and universities to some places of worship.
	As part of our intensifying measures to isolate extremists, a new unit bringing together police and security intelligence and research will identify, analyse and assess not just the inner circle of extremist groups, but those at risk of falling under their influence, and share their advice and insights. Building on initial roadshows of mainstream Islamic scholarship round the country, which have already attracted more than 70,000 young people, and an internet site which has reached far more, we will sponsor at home and then abroad, including for the first time in Pakistan, a series of national and local events to counter extremist propaganda. The next stage will draw upon the work commissioned by the Economic and Social Research Council, King's College and the Royal Society for Arts on how best to deal with radicalisation at home and abroad.
	One central issue is how to balance extremist views supporting terrorism that appear on the internet and in the media. The Home Secretary is inviting the largest global technology and internet companies to work together to ensure that our best technical expertise is galvanised to counter online incitement to hatred. I also welcome the decision by the Royal Television Society and the Society of Editors to hold a conference on how to ensure accurate and balanced reporting of issues related to terrorism in the media. To ensure that charities are not exploited by extremists, a new unit in the Charity Commission will strengthen governance and accountability of charities.
	A specialist unit in the Prison Service will be tasked with stopping extremists using prison networks to plot future activities. And because young people in the criminal justice system are especially vulnerable to extremist influence, we are making further funding available through the Youth Justice Board, the National Offender Management Service and the many voluntary agencies that work with young people to support young people who may be targeted for recruitment by extremist groups. Following evidence that some of those involved in promoting violent extremism have made use of outdoor activity centres and sports facilities, we are working with Sport England to provide guidance for the sector to ensure that, where possible, these facilities are not abused. Backed up by a new website to share best practice, a new board of experts will advise local authorities, local councillors and local communities on tackling radicalisation and those promoting hate.
	We have had mosques in the UK for more than 100 years, serving local communities well. These communities tell me that mosques have a much wider role, beyond their core spiritual purpose, in providing services, educating young people and building cohesion, and the majority already work very hard to reject violent extremism. As the newly constituted Mosques and Imams National Advisory Body recognises, however, the governance of mosques could be strengthened to help to serve communities better and to challenge those who feed hate. Our consultations with Muslim communities emphasise the importance of the training of imams—including English language requirements—and the Secretary of State for Communities and Local Government will be announcing an independent review to examine, with the communities, how to build the capacity of Islamic seminaries, learning from other faith communities as well as from experience overseas.
	In addition to updated advice for universities on how to deal with extremism on campus, the Secretary of State for Innovation, Universities and Skills and the Minister for Lifelong Learning, Further and Higher Education will invite universities to lead a debate on how we maintain academic freedom while ensuring that extremists can never stifle debate or impose their views. We will also consult on how to support further education colleges as well as universities.
	The Secretary of State for Culture, Media and Sport is working with the Museums, Libraries and Archives Council to agree a common approach to deal with the inflammatory and extremist material that some seek to distribute through public libraries, while also of course protecting freedom of speech.
	We know that young people of school age can be exposed to extremist messages. The Secretary of State for Children, Schools and Families will be convening a new forum of head teachers to advise on what more we can do to protect young people and to build bridges across communities. To ensure that young people have the opportunity to learn about diversity and faith in modern Britain, we will work in partnership with religious education teachers to promote the national framework for teaching religious education in schools, including making sure that children learn about all faiths. An advisory group will work with local communities to support the citizenship education classes run by mosque schools in Bradford and elsewhere. I can announce that one essential part of this will be to twin schools of different faiths through our £2 million school linking programme, supported by the school linking network.
	I am also announcing today a youth panel to advise the Government, learning from youth projects in different parts of the country which all enable young people to debate and discuss issues of concern, as does the work of the Youth Parliament, which has been running debates.
	We are sponsoring and encouraging a series of national and local mentoring programmes for young people, including a business in the community Muslim mentoring programme, new leadership training, and local youth leadership schemes in Blackburn, Waltham Forest, Leeds, and in partnership with Tottenham in Haringey. After discussion with Muslim women, a new advisory group has been set up by the Secretary of State for Communities and Local Government, which will advise on the access of women to mosques and their management committees.
	It is by seeking to build on shared interests and shared values that we will isolate extremists and foster understanding across faiths. Following the recent remarkable letter by 138 Muslim scholars from a diversity of traditions within Islam, which paid tribute to the common roots of Islam, Christianity and Judaism and called for deeper dialogue, we stand ready to support new facilities for multi-faith scholarship in Britain. A Green Paper will be published to encourage inter-faith groups to come together in every constituency of the country. I am also inviting the Higher Education Funding Council to investigate the idea of setting up in Britain a European centre of excellence for Islamic studies.
	We will have joint work with the French and German Governments on building an appreciation of the Islamic and Muslim heritage across Britain and Europe. Arts Council England, the Tate gallery, the Victoria and Albert museum and the British Library will all be taking forward projects to promote greater understanding. And, just as the British Council is connecting young people across the world through school twinning and volunteering exchanges, I am announcing that we will finance a rising number of young people from all faith communities to volunteer overseas.
	The intercept review will report in January. We believe that consensus now exists on post-charge questioning, and the Home Secretary is beginning a new round of consultations with parties and communities on detailed proposals on pre-charge detention, on which we believe that we can establish an all-party consensus. There is no greater priority than the safety and security of our people, and building the strongest possible relationships across all faiths and communities. I believe that it is possible, through the actions that we are proposing, to build a stronger consensus in Britain that will both root out terrorist extremism and build more vibrant and cohesive communities.
	I commend this statement to the House.

David Cameron: First, let me welcome the Prime Minister's statement. I am absolutely convinced that the terrorist threat we face today is of a completely different order from those we have faced in the past. As a nation, we need the hard-nosed defence of our liberties. The Prime Minister started by mentioning his national security approach and I have to say that we back it. We back the idea of a national security strategy and a national security committee. They were all proposed and adopted in our policy review earlier this year.
	As I listened to the statement, I noted a number of good ideas—from school twinning and a mosque commission to post-charge interview—that I am glad to say the Prime Minister has adopted. We are delighted that we are providing those good ideas and that the Prime Minister is taking them on. I have to say that there is one slight difference on the Opposition side: when we have good ideas, I do occasionally allow other Front-Bench Members to announce them. Perhaps that is another good idea for him to take on.
	On the broader issues of security raised in today's statement, we have three particular areas of concern. First, on securing our borders, the Prime Minister talks about a border force. Will he confirm that his proposals do not include the police, so it cannot be a proper border police force, which is what we want to see? Specifically, can he tell us whether the new force will have new powers or will it have to rely on existing powers? Similarly, will it have new money or will it have to rely on existing budgets?
	The second area of concern is counter-terrorism. As I said, we welcome the Government's adoption of our proposal that it should be possible to question suspects after they have been charged. The Government have also agreed to our suggestion of a review into the use of telephone tap evidence in court. I know that the review is taking longer than expected, but will the Prime Minister confirm that there will be scope for its conclusions to be included in the terrorism Bill when it comes before the House?
	Taken together, the introduction of those two measures—post-charge interview and the use of telephone tap evidence—should, we believe, relieve the need for holding terrorist suspects for more than 28 days without charging them. On that subject, can the Prime Minister explain what happened this morning? At 8 o'clock, his security Minister, Admiral West, said on the radio, and I quote:
	"I still need to be fully convinced that we absolutely need more than 28 days".
	Those were his words. One hour later, he said, and I quote again:
	"My feeling is, yes, we need more than 28 days".
	Can the Prime Minister tell us what happened this morning? People will conclude two things: first, that Admiral West was leant on; secondly, and more worryingly, will not the episode confirm in some people's minds that when it comes to this vital and important debate, the Government are not so much concerned with the evidence as with the politics? Does not that desperately need to change?
	Turning to Admiral West's review, we welcome his proposal on security at railway stations, airports, sport stadiums and shopping centres. Given what happened on 7/7, can the Prime Minister tell us what specific steps are being taken to safeguard London underground? Can he tell us whether the cost of guarding key sites will be met from the single security budget?
	More generally—this is something that the Prime Minister did not say, but I am sure that he believes it—does he agree with me that safeguarding our country against terrorism is actually a matter for all of us and not just the Government, the police and the security services? It remains the case today, as it has always been, that if we are to win against the terrorists, everyone has to be vigilant and to play their part.
	In a wide-ranging statement, the Prime Minister covered a number of specific areas, so may I throw out some specific questions? On the single security budget, the Prime Minister talks about extra money for counter-terrorism policing. Can he clarify—I have asked the question before, but have not had an answer—whether the single security budget covers special branches up and down the country that will do vital work in fighting terrorism?
	On asset freezes, the Prime Minister says that more needs to be done on legislation. He had responsibility for that area as Chancellor for 10 years and he often told us how much had been done. Can he now tell us in more detail about the weaknesses in the system over which he presided?
	On deportations, I very much welcome the progress report on the subject. The Prime Minister spoke about the need to deport those who put our national security at risk. Does he agree that we have got to will the means as well as willing the end? If he is advised that the Human Rights Act gets in the way of deportation, will he agree to its replacement?
	On mosques, does the right hon. Gentleman agree that we need to be absolutely clear that new imams coming to Britain should be able to speak English? Other countries such as Germany have taken steps to ensure that imams coming from abroad can speak the national language. Can he be specific and say whether he agrees with that?
	On the new border agency, he says that the new agency will enable the Government
	"to transfer intelligence from UK operations overseas to those making visa decisions".
	I have to ask him whether that does not happen already—and, if not, why not?
	The final area of concern that I want to address is the battle for hearts and minds. In his article in  The Sun this morning, the Prime Minister rightly talks about the need to
	"isolate Islamic extremists who... seek to manipulate and divide our society."
	He is right, but will the Government recognise that in order for that to happen, it is necessary to ban extremist groups like Hizb ut-Tahrir and Hezbollah, which do so much to foment violence? Will the Prime Minister make certain that none of the £6 million of grants from the Department for Communities and Local Government made available under its preventing violent extremism programme is going to groups within the Muslim community that have extremist or separatist agendas? So that we can check that, will he put the record of the grants in the House of Commons Library?
	In that context, can the Prime Minister explain why his Government have allowed extremists from abroad, such as Yusuf al-Qaradawi, Delwar Hossain Sayeedi and Matiur Rahman Nizame, into Britain? Finally, is he aware that the Irish Government recently refused entry to Ibrahim Moussawi, head of Hezbollah's viciously anti-Semitic TV station, Al-Manar? What approach will the Government take when Moussawi attempts to enter the UK to speak at a conference in early December? I would like an answer on that.
	In fighting extremism and terrorism and in securing our country, the Prime Minister will have the support of Opposition Members, but the national security strategy that we need must not only be right in theory, but effective and competent in its implementation. There is much in the statement that we support, but there is a lot of generalisation. Will the Prime Minister accept that tough action on deportation, on extremist groups and on banning preachers of hate is necessary at the heart of this strategy if it is really going to deliver?

Gordon Brown: I am grateful to the right hon. Gentleman for itemising the areas where the Opposition will support the Government in the legislative and administrative actions that we are taking. In respect of the particular named individuals that he mentioned, I will write to him specifically about them. As for grants to individual organisations, we will try to make available all the relevant information and place it in the House of Commons Library.
	The right hon. Gentleman raised some specific points. On intercept, let me say that, at the request of the reviewers, the review will be completed in January. The Home Secretary wrote to her counterpart this morning about that, clarifying that the reviewers requested more time. The report will be available in January and it will then be possible for any amendments based on it to be included in the counter-terrorism Bill.
	We are exactly agreed on the matter of imams speaking English. The right hon. Gentleman's point about London underground is contained within our recommendations.
	On the border agency, I have to tell the right hon. Gentleman that there is a debate about the role of the police in it. The Opposition believe that the police should be fully integrated into that agency but that raises issues which we must consider. It would create a national police force in place of local police accountability, which would change the nature of policing in this country. The Opposition should know that there is some opposition to that from some of the major police forces in this country and I believe that we should consider those issues carefully before making a final decision.
	I can tell the right hon. Gentleman that the border agency will have new powers, which are set out in the detailed document—the O'Donnell report—published today. It will have the funding necessary to do the job and I have already mentioned that it has a staff of 25,000. People who were doing different jobs in different areas are now being brought together and they will have additional powers to stop terrorists coming into the country. In charge of the agency will be a joint Treasury and Home Office Minister. The Home Office will be responsible to the House for the agency, but all the details are set out in the document published today.
	Let me deal with the issue of Hizb ut-Tahrir, Hezbollah and other associated organisations. I said to the right hon. Gentleman in the summer that if he had any evidence to bring to bear on the matter, he should send it to me. I have looked as carefully as I can into the circumstances of those groups. Even many of those who have left the groups and feel that they should be exposed are of the view that exposing them is not the same as banning them altogether. Maajid Nawaz, who talked about the matter on "Newsnight", said:
	"My ideal scenario would be not to ban the party but it would be that through the...power of discussion and persuasion that eventually the party would fizzle out in this country".
	There are divided views on the issue, but we must take into account whether, in banning an organisation, we would win an appeal in the courts as a result of that. I will keep all those matters under review, and will be happy, as will the Home Secretary, to consider any evidence brought to bear.
	I welcome the fact that there is common ground on considering the issue of intercept. I also welcome the fact that we are near to an understanding of the common position of the parties on post-charge questioning.
	When the House last discussed pre-charge detention, I referred to the fact that the shadow Home Secretary had said previously that he recognised that it might be necessary to go beyond 28 days in certain circumstances. I also quoted Liberty, which has published documentation saying that it could envisage going beyond 28 days in certain circumstances. Knowing the complexity of investigations, the danger of multiple plots, that people who are arrested usually have many false identities, false passports and false bank accounts, and that the investigation into such cases can take a great deal of time before a charge can be put, the issue is: in what circumstances can there be common agreement that it might be necessary and allowable to go beyond 28 days? Contrary to what the Leader of the Opposition said a few minutes ago, I believe that there is scope for agreement on that.
	Let me tell the right hon. Gentleman that on 17 July on the radio Admiral West said:
	"The scale of the whole thing is quite dramatic. Looking at the complexity of this, there will be occasions when we need more than 28 days".
	According to  The Times on 25 July, Lord West was backing call for terrorist suspects to be locked up, and according to  The Times on 5 November, he was also saying that,
	"there was a need to extend the 28-day limit on detention".
	As the right hon. Gentleman well knows, Lord West has also said today that he favours going beyond 28 days.
	The debate on 28 days should take into account what Lord Carlile has said:
	"I expect in the course of time to see cases in which the maximum of 28 days will be proved inadequate".
	Contrary to the views currently expressed, I believe that many Opposition Members will recognise that achieving a consensus on the circumstances in which it might be necessary to move beyond 28 days would be in the interests of the whole country. It would make no sense, however, to declare an emergency the minute that one case had to be taken beyond 28 days. That would provide oxygen to terrorism, which no one in the House would want.
	A range of measures are necessary to counter terrorism, and we are considering how to take a long-term view about winning hearts and minds in this country. I hope that all Members will understand, however, that whether in relation to prisons, universities, colleges or schools, or the future of mosques and the training of imams, we must consider each of those areas to see how we can build deeper understanding in our country across communities, and together root out terrorist influences that would undermine our society.

Vincent Cable: I add my welcome to the statement. I totally agree with the Prime Minister that, as far as possible, we should proceed on national security issues on the basis of political consensus. As someone who once worked in government alongside the intelligence and security services, I have always respected their professionalism and the need for them to be properly supported.
	There is already a great deal of consensus and progress on areas where we have common ground. We welcome the progress made on post-charge questioning. Many of the ideas put forward by Lord West on building design seem, at first sight, eminently sensible and worthy of support. The Prime Minister has reported the progress on intercept evidence, for which we have argued. We have also long argued for a unified border force, and share the concern expressed about the lack of integration with the police and the danger of two forces working in parallel. Perhaps he will set out what the O'Donnell report concluded on the matter, so that we can make progress.
	Pre-charge detention remains our main concern, and the issue is not separate from that of confidence in the minority communities, about which the Prime Minister spoke at length, because it is of great concern to them. On the issue of all-party consensus, there is already substantial consensus that we should not proceed beyond the present 28 days. That consensus embraces both Houses of Parliament, the Home Affairs Committee, the Joint Committee on Human Rights and many bodies outside. Let me quote to him the evidence of Rachel North, one of the victims of the 7/7 bombing, who had no party political axe to grind and summarised the situation admirably:
	"I have not seen anything that convinces me that longer than 28 days is needed to stop people such as...Mohammed Sidique Khan...detonating his bombs in the future...it's fundamentally important to us as a country that we do not hold people without them knowing what they're being charged with and why".
	Does the Prime Minister agree that the decision on the issue must be evidence-based? Is it not the case that of the 1,143 arrests under the Terrorism Act 2000, it has not been argued seriously in a single case that extended detention would have helped in their prosecution? Has not the Home Secretary acknowledged in parliamentary testimony that there has not yet been a single case that would have been helped by an extended period of detention?
	Does the Prime Minister agree that comparative experience is highly relevant, and that other countries with experience of dealing toughly with terrorism do not have such long periods of pre-charge detention? The United States has, I believe, two days, Turkey has seven and Spain has five. Why is Britain so fundamentally different in those respects?
	Finally, I want to ask the Prime Minister a series of specific questions, some of which are on issues that he touched on in his statement. First, on control orders, the previous Home Secretary acknowledged that the system was full of holes and that six of the controlees had absconded. Is the system to be preserved or scrapped, as it does not seem to work?
	Does the Prime Minister accept the growing volume of opinion that additional plea bargaining in terrorist cases would be useful to enable a wider range of witnesses who are peripheral to terrorist organisations to give evidence in court?
	Can the Prime Minister update us on the police radio issue, as there are reports that police radios still do not work in parts of the underground system and in many tall buildings? Will he indicate what progress has been made on that?
	Will the Prime Minister give us a report on the review of the relationship between MI5 and MI6? Clearly, they are distinct organisations with distinct mandates, but what has been done to improve information flow and co-operation between them?
	In relation to international co-operation, will the Prime Minister update us on his comments on 25 July about the co-operative work with President Sarkozy and the Germans on terrorism in Europe? Has that work advanced? In view of the crucial importance of cross-border co-operation, does he think that it was perhaps premature to have achieved an opt-out from the European treaty provisions in relation to counter-terrorism?

Gordon Brown: I am grateful to the hon. Gentleman, and welcome the fact that he has supported most of what was contained in the statement.
	On control orders, yes, we continue to use them, and their use was upheld in the courts recently. As for plea bargaining, that is allowed. On the police radio, the Airwave system is now being spread out across the forces, and considerable investment has been made.
	Co-operation with the French and German Governments is moving forward, and there is an attempt not just to have cross-border co-operation on immediate terrorist issues but to find a way to encourage a European Islamic scholarship across the countries of Europe.
	International co-operation will form part of the greater detail of the national security strategy. As for the national border agency, a detailed report published today sets out the relationship between the immigration and customs services, and all the work being done at the moment. The most important consideration is that those who work at the single point of entry have power not just to deal with the traditional cases with which they have had to deal in their own areas, but to stop people for reasons related to terrorism and take action.
	The hon. Gentleman raised, primarily, the question of the 28-day limit. I understand that the Liberal Democrats have taken a strong view on the matter, although Lord Carlile, the independent reviewer and a member of the Liberal Democratic party, has stated categorically that in the work he has done he has accepted the need for further days at some point. He says that there will be
	"cases in which the maximum of 28 days will be proved inadequate".
	The hon. Gentleman raised the issue of what evidence we had. At the time of the last airline plot the police had to deal with 400 separate computers and 8,000 discs, including compact discs and DVDs. They had to deal with people with false identities and false passports who were operating from numerous addresses with numerous bank accounts. Sometimes it is difficult in the first instance to know exactly who has been arrested.
	I have had the same experience as Home Office Ministers and police in relation to the freezing of terrorist assets. I did not answer a question from the Leader of the Opposition about why asset-freezing required new powers. The availability of information and the ability to use it in one's defence in the courts if challenged has been the central issue in regard to asset-freezing over the past few years, and that has made it more difficult for us to do the things that we need to do.
	I hope that, over time, the Liberal Democrats will come to accept that there are instances in which it may be necessary for people to be detained beyond 28 days. In such instances, there would be full safeguards that would include not just the approval of a judge but the involvement of the Director of Public Prosecutions before any action was taken, and a proper report to the House of Commons and a study by the independent reviewer so that people would know what was happening in each specific instance. It seems to me that in such cases the issue is not the arbitrariness of the procedure, because we are protecting against that, but whether we are satisfied that there are occasions on which either multiple plots or complex investigations will require more than 28 days' detention.
	There is one point on which I disagree with the hon. Gentleman. It is not possible to make an exact comparison between the legal and policing systems of all countries. I think the hon. Gentleman will agree that under the British system, people who are arrested are brought to court very quickly. That is not the case in other countries. When the figure of 20, 30 or 15 days is used in those countries, it sometimes relates to the time that it takes to bring people to court in the first place. Under the British system people are brought to court early, and the safeguards that we are trying to incorporate will require a judge constantly to determine whether a detention is still justified.

Paul Murphy: My right hon. Friend rightly put dealing with the radicalisation of young people at the centre of his statement. He said that there would be much more co-ordination between Departments. Given that a great deal of radicalisation takes place outside the cities of Westminster and London, can he reassure us that there will be proper co-ordination between the devolved Governments of Northern Ireland, Wales and Scotland, between local authorities and Government, and between the security services and the special branches? I consider that to be an extremely important way of dealing with radicalisation.

Gordon Brown: I am grateful to my right hon. Friend, who chairs the Intelligence and Security Committee. Both he and his Committee have made valuable proposals to which the Government have listened very carefully, and we will continue to listen to the advice that he and his colleagues give.
	My right hon. Friend referred to the devolved Administrations. When the Cabinet organisation that deals with emergencies of this kind convenes, it will normally include representation from the devolved Administrations in Scotland, Wales and Northern Ireland. In particular, when we are dealing with the need for co-operation in both policing and other areas connected with terrorism, the involvement of those Administrations is not just important but essential. That will continue to be part of what we do.

Patrick Mercer: The Prime Minister talks of achieving consensus on the 28-day limit, and I could not agree with him more. He talks of a series of sensible precautions that would be taken if the limit went beyond 28 days, and I could not agree with him more. The fact remains, however, that if we do go beyond 28 days, whatever the realities of the situation, our enemies will brand it as internment. We will be passing them such a powerful tool. May I beg the Prime Minister to look at the lessons of history, and not to walk into this ambush?

Gordon Brown: I thank the hon. Gentleman for the work that he did alongside Lord West in identifying some of the areas in which protective measures must be strengthened, and will be strengthened as a result of that work. He identified not only the London underground, which has already been mentioned, but the way in which, particularly in new buildings, we can design out some of the flaws that we have detected when examining what has happened in relation to some terrorist incidents.
	The hon. Gentleman raised, with some passion, the issue of the 28 days and the message that we send to other countries. I could not agree with him more that our ability to defend our liberties when faced with a terrorist threat is crucial both to the message that we send to ourselves about the health of our society, and to the message that we send around the world that we will not be blown apart by terrorist activity in our country and will not give in to it. I must tell the hon. Gentleman, however, that proposals even from his party envisage our going beyond 28 days in certain circumstances.
	The issue for me, which I think will increasingly be the issue for everyone, is this. I believe that if it is possible to protect against arbitrary treatment of individuals in the context of complex and sophisticated investigations by ensuring that the police are responsible to the courts and perhaps even to the Director of Public Prosecutions, that Parliament is involved at some stage, that there is a report on individual instances from an independent reviewer or any other body chosen by the House and that every instance in which we go beyond 28 days is properly investigated and analysed, in a sense we will design out the arbitrariness in the system, and also send a message about the importance that we attach to people being treated fairly even when they are suspected of terrorist offences.
	This is a debate that we will continue to have. I do not believe that the issue is one of principle, because the Opposition have already conceded that there are circumstances in which we may have to go beyond 28 days. The issue is whether we can secure agreement on the individual detail of the circumstances in which, with proper protection, that would be justified.

David Winnick: I hope that my right hon. Friend and the Home Secretary will find time to read the evidence that Rachel North gave the Home Affairs Committee yesterday. As a survivor of 7/7, she is very much opposed to any extension of the 28-day limit.
	Does my right hon. Friend agree that one of the most essential things that we should be doing is exposing a notorious lie propounded by the hate merchants and racists—a very small and unrepresentative section of the Muslim community—who say that Britain is the enemy of Islam? Did we not go to war in 1999 to stop the ethnic cleansing of Muslims, a war that was very unpopular in some quarters but was fully justified? Is it not a fact that, time and time again over the last 40 years, we—certainly Labour Members—have fought against any form of discrimination against our fellow citizens, whether they are Muslims, blacks, Hindus or Sikhs? Is that not something of which we should be proud?

Mr. Speaker: Before the Prime Minister answers, I remind Members that there is a time limit on Back-Bench speeches in the debate later today because so many Back Benchers wish to speak. I do not expect speeches now; hon. Members must put questions to the Prime Minister.

Gordon Brown: My hon. Friend is absolutely right. He asked me to look at the evidence that was given to the Home Affairs Committee yesterday, and I will do so as we continue our debate on the very issue that he raised. As for the links between us and the Islamic religion, we should take the most recent statement by Muslim scholars very seriously indeed. That showed a determination to find common ground between the Islamic faith, Christianity and Judaism. I believe that those scholars requested that there be a proper dialogue between the faiths. That would yield a far greater understanding than exists at the moment. Over time, that would have a huge influence, particularly on young people in our country and other countries. I hope that we can join together in that activity.

Michael Mates: If and when proposals are brought forward to extend pre-charge detention, will the Prime Minister ensure that the mistake that was made last time is not repeated? Neither the police nor the Government or anyone else made out the case properly for the extension that was required. While many of us know that there are some pressing arguments in favour, to set against perfectly proper libertarian ones, unless and until those are fully explained, as the Prime Minister is starting to do now, they will not be acceptable to the House.

Gordon Brown: It is precisely for the reasons that the right hon. Gentleman suggests that people must be sure of the evidence, the ground on which the proposal has been considered and the detail of it, in so far as how it protects the civil liberties of the individual. I have been anxious that there be a proper debate, both here and outside the House, on that very matter. In the interests of a common front in the fight against terrorism, I am anxious that, wherever possible, we can find consensus on that issue. There is new evidence about the sophistication, the complexity and the international nature of those cases. No one looking at, for example, the airline plot or at other investigations, including even the June investigations, is under any illusion but that we are dealing with contacts with large numbers of people in different continents. No one is under any illusion, either, but that we are dealing with sophisticated technological evidence that would have to be analysed in great detail. The question is whether we can provide sufficient safeguards so that individual liberties are protected and arbitrariness is avoided in circumstances where it may be necessary—I think that that is acknowledged in principle, although people are worried about the effect in practice—to go beyond 28 days. Therefore, I thank him for his question because that is exactly the way the debate should happen.

Lyn Brown: I thank the Prime Minister for his statement. I had a consultation with members of the Muslim community in my constituency a few weeks ago and their messages were clear. First, they revile terrorism and all those who promote hate within our communities. They welcomed the perceived change of tone by the Government towards the Muslim communities over past months. I believe that there is much in the statement today that they would welcome. However, they continued to voice concerns about pre-charge detentions. May I urge the Prime Minister to continue to have dialogues with real members of the community, not organisations that purport to represent them, so that we can work together towards the common aim of peace and security in this country?

Gordon Brown: It is because of the points that my hon. Friend has raised that the debate about pre-charge detention must go beyond the House and into the communities, where people will want to take an attitude and a view on that issue. There have been five regional seminars already where those issues have been aired. The debate on that will continue over the next few weeks and months. I hope that, in her community as well as in others, people will see that we are determined to protect the civil liberties of the individual.

Iain Duncan Smith: Many of us on the Conservative Benches who might well be persuaded were evidence to be provided about an extension of pre-trial detention are bemused by the way in which the Government have gone about initiating—that is the word that is used—that debate. We have seen absolutely nothing that suggests the reason why, in the Prime Minister's words, there is a need for a debate, let alone for an extension. He talked about computer problems, checking on finance and all those other things, yet in no single case has there had to be an extension beyond 28 days. Will he please now stop the ludicrous discussion and put on the table the specific cases where we needed to go beyond 28 days?

Gordon Brown: It is not lawful to go beyond 28 days. Therefore, it is not possible to detain someone beyond 28 days without declaring a state of emergency in this country. It is hardly surprising, therefore, that no case has gone beyond 28 days before the charge has been made. In the next stage of the debate, I will be happy to put forward some of the evidence that has been available to me, but I ask the right hon. Gentleman to look, as he would wish to do, at the more sophisticated, complex and internationalised nature of the investigations that police have to conduct. Ken Jones, president of the Association of Chief Police Officers, said:
	"Investigators are facing an unprecedented international dimension in terrorism cases and the necessary enquiries to ensure public safety have a time dimension to them that is not catered for within the existing timescales."
	That is only one of the senior police officers who have made their views known. Lord Carlile, the independent reviewer, made his view known.

Keith Vaz: I warmly welcome the proposals, which serve to protect the public and prevent terrorism. Is the Prime Minister satisfied that centrally there are the mechanisms that will benchmark the delivery agencies? On 28 days, the Government's approach has been open and transparent. The Select Committee on Home Affairs has not completed its investigation. If there is any further evidence that Ministers have that perhaps the Select Committee does not have, will he share that information with the Committee, so that we can better inform Parliament of our decisions?

Gordon Brown: Of course. I welcome the fact that my right hon. Friend's Committee has an open mind on those issues and is looking at the evidence that is brought before it by many people, including a large number of people from the Muslim community. Of course we will endeavour to furnish him with what information is available, but at some point, of course, we will have to reach a decision.

Andrew MacKay: Why did the Prime Minister's Security Minister, Admiral West, say on the "Today" programme this morning that he would need absolute proof before supporting any extension of the 28-day limit, and then completely change his mind an hour later?

Gordon Brown: Lord West was asked whether he was convinced of the need for more than 28 days' detention, to which he replied:
	"I am personally convinced there is...I personally absolutely believe that within the next two or three years we will require more than that for one of these complex plots."
	That was in the interview on BBC News 24 this morning.

Mark Durkan: I thank the Prime Minister for his statement and ask him to consider a couple of points from an Irish dimension. The Cabinet Office report "Security in a Global Hub" describes the current situation in relation to the common travel area. Will he assure us that there will be best engagement, with both the Irish Government and the Northern Ireland Executive, on how people travel and how they are treated in comparison with other citizens of these islands? That is a matter of sensitivity to everyone, north and south.
	Will the Prime Minister also assure us that the Government are learning the lessons of the counter-productive effects of counter-terrorism legislation in the past in this country? He rightly says in his statement that al-Qaeda will try to manipulate humanitarian and political issues. The form and length of detention is one of the things that it will try to manipulate. It will also try to manipulate the impression that some people in the Muslim community are being ghettoised and others are being patronised. I ask the Prime Minister perhaps to consider how he presents the community, schools and youth measures that he has talked about today.

Gordon Brown: That is exactly why the Home Secretary and the Minister for Local Government are trying to reach out to communities with a number of initiatives that will involve Muslim women, young people, schools, madrassahs and mosques in discussing the very issues that the hon. Gentleman is talking about. We are determined not just to root out those who are extremists but to build understanding between young men and women of the different faith communities in this country. While the individual measures that we have outlined today may in each of the different areas seem specific, taken together, they amount to a strategy to prevent people from falling prey to terrorist influences in this country.
	The hon. Gentleman's first point was about the relationship with the Irish Government on issues related to that. I can assure him that a strategy is being worked out with the Irish Government on those issues.

Angus Robertson: The Prime Minister is well aware of the speedy and effective response to the Glasgow airport attack by the Scottish Government and law enforcement agencies. I think he is aware that both the Scottish National party and Plaid Cymru are continuing discussions with the Home Office on the detention issue. On today's report, will the Prime Minister confirm that, for the plans to work north of the border, they will have to include specific efforts by the Scottish Government, the Justice Department, the Scottish police, the Scottish Crime and Drug Enforcement Agency and the Scottish Environment Protection Agency? Will he give a commitment that the Westminster Departments will continue to work effectively with the Scottish Government and their agencies to help to combat and to deter attacks and to provide the security and safety that we all want?

Gordon Brown: Of course we will work with all the agencies in Scotland and every part of the United Kingdom that have a role to play, but I should remind the hon. Gentleman before he runs away with himself that terrorism and counter-terrorism is not a devolved issue; it is an issue for this United Kingdom Parliament.

Diane Abbott: On the 28 days question, the Prime Minister refers to the views of Liberty in a way that will surprise many, not least the organisation itself. Is it not the case that Liberty's precise view is that in the unlikely event of there being multiple—three or four, perhaps—terrorist attacks on the mainland, the Government do not need new powers as they already have the necessary powers for that remote set of circumstances? Is it not the case that Liberty remains adamantly opposed to any extension of pre-charge detention beyond 28 days, both on principle and for the pragmatic reasons that have been raised in the House?

Gordon Brown: But I have to tell my hon. Friend that the difference between us is not that Liberty says that there are no circumstances in which we might have to go beyond 28 days. There is not a disagreement in principle on that. The issue is that if we had to go beyond 28 days Liberty suggests—as does the Conservative party—that we would have to declare a state of emergency. I do not believe that it would be a good thing for a terrorist group to be given the oxygen of publicity by us having to declare a state of emergency in order to investigate it. It is not an issue of principle that divides us on this matter. The issue is this: in a case where the police might need more than 28 days, what are the practical circumstances in which Parliament could accede to that without declaring a state of emergency and subject to the protection of the civil liberties of the individual, reporting to Parliament and going through an independent judge?

Gregory Campbell: May I offer the support of my colleagues and myself for many of the measures attempting to thwart international terrorism that the Prime Minister has outlined? I ask him, however, to do two things. First, will he have discussions with the First Minister in Northern Ireland and the Prime Minister of the Irish Republic in order to prevent access to the Irish Republic by international terrorists who would use it as a base to launch attacks in mainland UK? Will he also ensure that the travelling public in Northern Ireland are able to continue to go about their business in a normal way—that people will continue to be able to travel between Northern Ireland and Great Britain as between Scotland and Wales and the capital city of London?

Gordon Brown: The hon. Gentleman is absolutely right. We want the maximum freedom of movement. I will continue my friendly discussions with the First Minister in Northern Ireland, and I have already raised these issues with the Taoiseach.

Fiona Mactaggart: Has the Prime Minister observed that often a precursor to support for terrorism is a sense of grievance, and does he agree that crucial to overcoming such a sense of grievance in minority communities is the creation of a culture of respect for basic human rights such as fair trial, free speech and habeas corpus? Will he therefore resist the siren calls of the right hon. Member for Witney (Mr. Cameron) to abolish the Human Rights Act 1998?

Gordon Brown: My hon. Friend is right. The message we should send out to the world is that our country wishes to protect the civil liberties of the individual. That is contained in the Human Rights Act, which was passed by the House of Commons and implements in British law the European convention on human rights. Whatever debates we have on the 28 days issue, I hope that there is a determination among all Members that, in the face of the threat of terrorism, we will not succumb but will defend the liberties of the individual.

William Cash: In relation to that answer, will the Prime Minister accept that the whole question of the protection of the public from terrorism is often jeopardised by judicial interpretation of the Human Rights Act and European law generally? Does he therefore accept that to achieve his aim of the protection of the public we need British law for British judges and British judges for British law?

Gordon Brown: I think that the hon. Gentleman will find from the information that becomes available at the end of the year that whatever his doubts about European law might be it has not prevented us from deporting up to 4,000 people from this country, and nor has it prevented us from deporting a large number of people to within the European Union.

David Hamilton: I understand the point that has been made about local police looking after their own interests, but we already have a national police force: the British Transport police. It deals with railways and ports. Should we not discuss whether to extend its powers so that it takes over airports as well?

Gordon Brown: My hon. Friend raises an important point about the engagement of the transport police in these matters, but the national borders agency will bring together customs and immigration staff and there will be a policing presence on the board of the new agency and strong links with the transport police.

Brian Binley: Cutting unnecessary delays at airports is vital, and we all welcome additional screening equipment. However, twice while passing through Heathrow in the recess I was held up, as were many others, because existing screening equipment was not staffed. Will the Prime Minister take that into account and ensure that his new equipment is matched with properly trained staff? That should have been, but was not, done in the past. Will he promise that it will be done in future?

Gordon Brown: We will take on board all the hon. Gentleman's comments. In particular, I will pass on to BAA his desire for proper staffing at Heathrow to make it easier and more convenient for people to undertake their journeys.

Point of Order

Andrew Robathan: On a point of order, Mr. Speaker. Yesterday, the Secretary of State for Children, Schools and Families said in respect of school funding:
	"Leicestershire is 34th out of 149 local authorities over the next three years."—[ Official Report, 13 November 2007; Vol. 467, c. 563.]
	Actually, it is 149th—for every year. I believe that I am now allowed to say that it seems to me that the Secretary of State was misleading the people of Leicestershire. Can he be asked to come back to the Chamber and, having checked his facts, to rectify that statement?

Mr. Speaker: Members should not use a point of order to extend a debate.  [Interruption.] That might be a fact, but this is not a point of order or a matter for the Chair. The hon. Gentleman must rebut that comment in the customary fashion, and he knows how to go about that as he has been a Member for a long time.

Orders of the Day

Debate on the Address
	 — 
	[Sixth Day]

Order read for resuming adjourned debate on Question [6 November],
	That an Humble Address be presented to Her Majesty, as follows:
	Most Gracious Sovereign,
	We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom and Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament .—[Mr. Caborn.]
	 Question again proposed.

The Economy and Pensions

Mr. Speaker: I inform the House that I have selected for debate the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that on the last day of the debate on the motion for a Humble Address to Her Majesty the House may also vote on a second amendment selected by the Speaker. I have selected the amendment in the name of Dr. Vincent Cable for that purpose. The vote on that amendment will take place at the end of the debate, after the amendment in the name of the Leader of the Opposition has been disposed of.

George Osborne: I beg to move, as an amendment to the Address, at the end of the Question to add,
	'but humbly regret that the Gracious Speech fails to set out a clear vision on the future of economic policy, contains no measures to develop Britain's competitiveness, includes proposals that will damage enterprise, and does not contain any measures to reduce youth unemployment and to make significant inroads into the number of people on benefits who could work; condemn the absence of measures to ensure real improvements in the public services to give people power over their lives and generate greater value for money for taxpayers; and further regret the absence of measures in the Gracious Speech to tackle the pensions crisis to which Government policy has contributed.'.
	This is the last day of the Queen's Speech debate and the first occasion on which the new Chancellor has taken part in it in his new role, and I want to begin by reviewing his first four months in office. He has presided over the first bank run for 140 years; he turned his own pre-Budget report into a political disaster; he has downgraded growth and revealed a £16 billion hole in borrowing; he has hit pensioners with another £2 billion tax raid; he has announced a catastrophic plan for capital taxes that has the Prime Minister briefing against him, and he has managed to cede the entire intellectual agenda on the economy to the Opposition. What an amazing start—congratulations.
	I fear the story of this Chancellor is set to be a classic political tale of someone who rises from nowhere and disappears to nowhere without having been anywhere in between. I grant that he has taken one difficult decision. I have to hand a report from  The Times:
	"Alistair Darling has reluctantly agreed to use Dorneywood because it would otherwise be given to lower ranking functionaries".
	Bad news: he is forced to spend weekends at Dorneywood. Good news: the Prime Minister thinks there are lower ranking functionaries. The question we ask today of the current Chancellor is simple: can he up his game and provide the leadership and vision required in these times of economic uncertainty?
	Let us look at three key areas that a Chancellor must command: tax, spending and, most importantly, economic stability. On stability, it is not the Government's fault that the global credit markets froze on 9 August, but it was only in Britain that those international problems triggered a run on a high street bank. The collapse of Northern Rock is not just a tragedy for the many thousands who work for the bank; it has done serious long-term damage to Britain's reputation for stability.
	Last week, we fell to 46th place in the World Economic Forum's latest rankings for economic stability. The whole point of the tripartite arrangements created by this Government a decade ago was that they would stop people queuing in high streets trying to withdraw their deposits, yet when the moment of reckoning came, no one was in charge—the Financial Services Authority did not have the authority, the Bank did not have the final say and the Chancellor did not have the strength of leadership.
	I do not blame the Chancellor for the system of oversight; I blame his predecessor. As one of the original Monetary Policy Committee members, Professor Buiter, told the Treasury Committee this week,
	"responsibility...must be laid at the door of the man who created the arrangement—the former Chancellor and current Prime Minister, Gordon Brown".
	The fact that the Government are bringing forward legislation on deposit insurance in this Queen's Speech is, in itself, an admission of failure.
	I wrote to the Chancellor more than a month ago offering cross-party support in preparing that legislation—not that he has ever bothered to reply. As we consider the Bill, we will insist that there is a balance between protecting the saver and not shielding managements from the consequences of their decisions. It is just a pity that neither the Chancellor nor his predecessor introduced the legislation before the crisis, because we know that that is precisely what Mervyn King was urging him to do. Had he or his predecessor listened to the Governor of the Bank of England, the run on Northern Rock might not have happened.
	Before Parliament is asked to fix a problem, we must be clear what went wrong in the first place. We still do not know all the facts. I welcome the fact that the Treasury Committee is holding its inquiry. This will be one of its most important reports of the Parliament. Let me just give the House one example of something that we do not yet know about the events leading to the collapse of Northern Rock. On the crucial day before the run started, the Governor of the Bank of England wrote to the Chancellor of the Exchequer setting out the conditions of the rescue. The Governor then told the Select Committee that he was happy for that letter to be published, but the Chancellor refuses to publish it. There is a disagreement between the Governor and the Chancellor. Why is the Chancellor refusing to publish this letter, which the Governor is happy to see published? What is he trying to hide?
	When will we hear about the future plans for Northern Rock? We learn more from press leaks than we do from the Chancellor, even though this bank has borrowed more than £20 billion on the public account, which is more than the entire Home Office budget. His excuse is that the decisions about the future are for Northern Rock's management—indeed, the Prime Minister has said during Prime Minister's questions that this is commercially confidential—but it is an open secret in the City that the Treasury is conducting the negotiations, and it is the taxpayer who is exposed.
	This is not about commercial interest; it is about the public interest. We know, for example, that the Treasury has hired Goldman Sachs to advise it on the sale of Northern Rock and we hear the ominous news that Baroness Shriti Vadera is getting involved, presumably on No. 10's instructions. If the Prime Minister does not have the confidence in his Chancellor and his Treasury Ministers' ability to solve the problem, why should we?
	Let the Chancellor at least confirm today the reports from Northern Rock's investment bank that the Bank of England facility could still be in place in three years' time, which is a great deal longer than the weeks or months he told the Select Committee in September. Let him assure us that at the end of the chaotic process, the taxpayer will not be left with a huge bill. Although we welcome the broader review of the future of the tripartite arrangements, let him tell us when he and the Prime Minister will take a decision on the reappointment of the Governor of the Bank of England. Dangling the sword of Damocles over Mervyn King while allowing officials in the Treasury and Downing street to brief against him may satisfy the vanity of the Chancellor and the Prime Minister, but it does nothing to restore confidence in the independence of the Bank of England. They should have the strength to make the decision about his future and the foresight to ensure that future Governors are not treated in this way by adopting longer fixed terms in the way that we propose.
	Stability is the first priority for any Chancellor, but tax is the next area that he must command. In an age of intense global competition, when capital and business can move with ease, we need a low and competitive tax system. That is the lesson from not only Ireland but other countries, such as the Netherlands, which are now reducing their corporate taxes. Yet Britain has a Chancellor whose first tax change is an 80 per cent. increase in capital gains tax. That was one of the few tax measures in the pre-Budget report that was not inspired by the Conservative party, and it is universally regarded as a self-inflicted political and economic disaster.

Julia Goldsworthy: Will the hon. Gentleman confirm that the Conservatives opposed taper relief when the Prime Minister introduced it when he was first Chancellor?

George Osborne: When taper relief was introduced it related to a 10-year period, rather than the two-year period that applied until the Chancellor abolished it in the pre-Budget report. The system that the Government inherited from the previous Conservative Government had retirement relief —[Interruption.] I do not know why Labour Members are chattering, because they are reintroducing a single rate for capital gains tax. When it was announced a month ago, they said that they would not have retirement relief, but the Prime Minister is now saying that they might. If they reintroduce indexation, we will be virtually back to where we started.
	The Conservatives are against the changes in the pre-Budget report. If they make their way into the Finance Bill in April, we will oppose them, for these are exactly the wrong tax changes to make in the face of a new economic revolution that puts a premium on enterprise and risk taking. That is why all the major business organisations come together to condemn the tax rise as damaging to long-term investment and likely to set back the growth of the economy.
	The Treasury should be familiar with that analysis because it used to share it. Six years ago, the former Chancellor published a report that said that the tax change now being proposed by the current Chancellor
	"rewards the short-term speculator as much as the long-term investor".
	In fact, it has been difficult keeping the Government's advisers off the airwaves in recent weeks, as they queue up to attack the proposals. Lord Bilimoria, the Chancellor's small business adviser, says:
	"Investment in small businesses and entrepreneurship has been penalised."
	Sir Ronnie Cohen, who by happy coincidence combines generous support for the Government with unexpected appointments to Government taskforces, said this weekend:
	"So much protest has followed the measure that I hope they will listen."
	What about the newest and shiniest adornment in the ministerial trophy cupboard? I am, of course, referring to the great Lord Digby Jones of Birmingham, the Labour Minister who does not trifle himself with such insignificant baubles as Labour party membership. He says that
	"medium-sized businesses, in particular, think this
	—tax rise—
	"is a terrible thing."
	To be fair to the Chancellor, throughout this hail of criticism from friend and foe he has refused to budge, or to countenance a U-turn or concession. There is something admirable about the Minister who sticks to his guns, but when his guns are spiked by his own Prime Minister, admiration turns into humiliation. The Chancellor told us at that Dispatch Box that there would be no concessions because this was
	"the right thing to do."—[ Official Report, 18 October 2007; Vol. 464, c. 954.]
	Four days later, the Prime Minister told a newspaper editor over breakfast that it was the wrong thing to do and that there would be concessions on retirement relief. What did the Treasury and the Chancellor know of that prime ministerial U-turn? They knew absolutely nothing.

Lorely Burt: If the Government see fit to reintroduce retirement relief, what will the Conservatives' attitude be?

George Osborne: We would certainly welcome any concessions on this. We oppose the whole change that is being put forward, but if all we are going to get is some concessions, we shall seize them. We shall take concessions that we secure, campaign on them in places such as Solihull and no doubt win those parliamentary seats at the general election.
	What did the Treasury and the Chancellor know of this prime ministerial U-turn? They knew absolutely nothing about it. When his great Department of state was asked to confirm the story, it answered, "We don't know. This did not come from us." Can one imagine the former Chancellor, who is now in No. 10, ever standing for such shabby treatment from his superiors—not that he thought he had any? I am sure that the new Treasury team was grateful for the helpful explanation provided by Downing street. Again, I have the report here:
	"Supporters of Gordon Brown say that it does not really matter that Darling has emerged as an insignificant and weak Chancellor. They even make a virtue of the fact, insisting that the nation ought to be grateful that such an experienced and respected figure as Gordon Brown is keeping such a wary eye on events at his old shop."
	We know that the Chancellor is not in charge, but when he replies in this debate, will he clear up the confusion, to which I have just alluded, for thousands of small business owners who are wondering whether to sell up before next April? Is the retirement relief, briefed by the Prime Minister in private, now a firm commitment? Will it be £100,000 or perhaps more? Are other concessions on the way, such as indexation? I would be happy to give way to the Chancellor so that he can clear up what the Prime Minister said. We cannot all wait to be invited for breakfast at No. 10 to find out what is going on at the Treasury— [ Interruption. ] For a second there, I thought that we were going to get an intervention, but it appears that we will just have to wait.
	Of course, these days, one can do even better than breakfast at No. 10 by coming to the Conservative party conference to discover what will be in the next Labour Budget. We proposed a levy on non-domiciles, and the Chancellor accepted it. We offered a cut in inheritance tax, and he followed it. With the Liberals, we argued for an airline tax on pollution: he spent six months attacking it, and now he is introducing it. Well, no one ever promoted him for his originality. We have had reforming Chancellors and iron Chancellors, and now we have the xerox Chancellor. I am not offended, as imitation is the sincerest form of flattery. But while he is following our ideas, why does he not cut the corporation tax rate by simplifying the system? Why does he not reverse the small company tax rise, set for next April, by scrapping the complex allowances that he is introducing? And why does he not adopt our plans to take millions of first-time buyers out of stamp duty altogether? Why does he not do all those things that we propose? He should not worry, because we will still let him hold up the Red Box on Budget day.

John Redwood: My hon. Friend is making a great speech. Has he noticed how the Chancellor slipped through a substantial increase in petrol tax at a time when oil prices were rising, so that he now takes more than 65p a litre from everyone who buys petrol to go about their business? That has led to a spike in inflation so that we have to pay twice, first in oil taxes and second in higher interest rates because of the inflationary consequences. Is that not also a blot on his record?

George Osborne: The ways that the Chancellor finds to raise revenue do not surprise me at all. Of course, the remarkable thing about this Government is that even after a decade of stealth taxes and the highest tax burden in peacetime history, we still manage to have the largest budget deficit in Europe—a formidable achievement.

Rob Marris: Before the hon. Gentleman took the intervention from the right hon. Member for Wokingham (Mr. Redwood), he reeled off a string of tax cuts that he thought would be in the interests of the British economy, and I understand his position, although I do not agree with it. Would he care to say what spending cuts there would be if those tax cuts went through or, alternatively, what other mainstream taxes he would raise?

George Osborne: Well, I— [ Interruption. ] I was about to say how much I like the hon. Gentleman, because we have served together in Committees on Finance Bills for many years. I was about to say, before Labour Members started chirping, that the hon. Gentleman normally pays close attention to what other people say, so I shall repeat what I just said. I asked why the Chancellor does not cut the corporation tax rate by simplifying the system. Why does he not reverse the small company tax rise by scrapping the complex allowances? Those are revenue-neutral changes to the tax system. The hon. Gentleman is right: the proposal to take millions of first-time buyers out of stamp duty altogether is a tax cut, but it would be paid for by the increase in taxation on non-domiciled taxpayers. Those proposals are all fully funded.

Chris Bryant: Will the hon. Gentleman give way?

George Osborne: I cannot resist giving way to the man who so successfully organised the coup against Tony Blair last year.

Chris Bryant: The hon. Gentleman has raised the issue of taking first-time buyers out of stamp duty several times. That sounds attractive, but has he thought through the detail? This may seem a silly question, but how does one decide who is a first-time buyer? Does it include a couple with one partner who has bought a house already and one who has not? If he does not have a proper answer, can he tell the House why it would be fairer to provide an exemption from stamp duty for people who might or might not be wealthy, rather than deliberately providing support to the poorest in society?

George Osborne: The proposal will apply to couples if both are first-time buyers. It is not an insurmountable problem, because it has been introduced in Australia and the nationalist Government in Scotland have a different scheme, which involves public subsidy, but they are also looking at first-time buyers. Many other countries are doing it. I am sure that the hon. Gentleman would not want it to be the case that first-time buyers living in the Chancellor's constituency were helped, but those living in his constituency were not.

Chris Bryant: The hon. Gentleman clearly does not understand about stamp duty in the Rhondda, but very few people pay any stamp duty there.

George Osborne: The hon. Gentleman cannot hold me responsible for the failure of this Government to regenerate the Rhondda.
	I was talking about the Chancellor's weakness on taxation, but I shall now turn to the third key area that a Chancellor should command—spending. Last month he announced the results of the comprehensive spending review. We were told, "Just you wait. This will be the great moment when the Brown Government finally sets out its vision." But the spending review has sunk without trace.
	Of course, I am delighted that the Government are now committed to our policy of sharing the proceeds of growth, but tighter spending plans are not enough. The public want value for money. They will not get it from the European Communities (Finance) Bill, which we debate here next Monday. I understand that the Chief Secretary will lead off for the Government. It is a Treasury Bill, and it is the most expensive piece of legislation included in the Queen's Speech. I say "included", but for some reason it was not mentioned in Her Majesty's actual speech and it was not referred to at all by the Prime Minister in the debate later. But the European Communities (Finance) Bill will sign away more than £7 billion of the British rebate in return for absolutely nothing. It contains no commitment to CAP reform, or even a European budget that the auditors can sign off—something that they refused to do again this week.
	We know that it is a bad deal because the Prime Minister, when he was Chancellor, went around telling every journalist that he could find that it was a bad deal. He said it was all Tony Blair's doing, and that he would never have signed it. In the heat of the negotiations, one Treasury official put it like this:
	"We have ended up giving away much more than we expected and with precious little to show for it in return".
	In case anyone missed the point, someone described as a
	"senior aide to Gordon Brown"
	helpfully explained to the papers what it meant, saying that
	"it will inevitably lead to reduced public spending. There is no other way to achieve it."
	The former Chancellor was right about that. If we had kept the rebate, we could have paid for 27,000 more police officers or 31,000 more teachers, and still been able to do up Lord Malloch-Brown's apartments in the Admiralty.
	Now the Prime Minister is asking his new Chancellor to introduce it and us lot to pass it. Well, he will not have our help in doing so. There is a broader point. No one doubts that the Government are spending large sums of public money. But the entire country is asking where all the money has gone. In the last month, we have had some answers—£500 million on literacy programmes that have not made any difference to literacy rates; £885 million on truancy, but truancy levels continue to rise; and £84 billion in total spent on a welfare-to-work programme that the first Minister to have responsibility for it described this weekend as a "failure". When the Prime Minister says "British jobs for British workers", Labour Members blush, because they know that borrowing slogans from the National Front is no substitute for a proper welfare-to-work policy.  [ Interruption. ] I should be amazed if anyone were prepared to repeat the slogan that the hon. Member for Vale of Clwyd (Chris Ruane) has just uttered from a sedentary position.
	Then there is the £19 billion that the London School of Economics calculated might have to be spent on identity cards. We know what the Chancellor really thinks about them because he once made the mistake of telling us. Identity cards, he said,
	"are unnecessary and will create more difficulties than they will solve...I do not want my whole life to be reduced to a magnetic strip on a plastic card".—[ Official Report, 2 March 1992; Vol. 205, c. 70.]
	If that is the case, why did he take the job as the Prime Minister's Chancellor?
	Not only the individual projects waste money, but an unreformed public service is failing to get money to the patient and the parent. Slowly but surely, just as we predicted, the roadblocks to reform are emerging under this Prime Minister: giving local education authorities greater control over academies, cancelling hundreds of millions of pounds of private sector contracts in the national health service and the backsliding on the Freud report on welfare. A strong Chancellor who cared about value for money would be dismantling those road blocks to reform, not helping to erect them. However, he will not dismantle them because he is incapable of challenging the Prime Minister's policy of throwing taxpayers' money at any problem without any proper regard to how well it is spent.
	The Queen's Speech was supposed to be the moment when the Government drew a line in the sand, but instead it was the moment when they dug a hole and kept digging. Now they drift from one crisis to another, buffeted by events, lacking any clear vision about what they are planning to do in the next week, let alone the next year. Back in the glorious days of June, the Prime Minister promised us a Government of all the talents. In one sense, he has delivered. We have exceptional naivety at the Foreign Office, fantastical incompetence at the Home Office and exceptional weakness at the Treasury. The job of the Chancellor of the Exchequer is to be the rock in the storm, yet this Chancellor's indecision and poor judgment have contributed more than most to the heavy weather that the Government now find themselves in.
	At a time of financial instability and a period of great economic change, Britain needs a strong Government and a strong Chancellor to guide us through. We have neither. The sooner the election comes that will bring about the real change this country needs, the better.

Alistair Darling: There was a time when the Queen's speech was an opportunity for the Government to set out their programme for the coming Session and for the Opposition to set out their vision, too. When I saw the amendment that has been tabled by the Leader of the Opposition, which criticises us on the vision for the future economy, competitiveness and a range of other measures, I thought that the shadow Chancellor might be telling us his vision for the economy over the next few years and setting out the measures that he would put in place to make us more competitive in the future. However, we heard absolutely nothing.
	The other thing that is striking is that it is the second major speech that he has made, after his conference speech, in which he has not mentioned once what he would do to tackle the major problem of child poverty here and abroad. One would have thought that the shadow Chancellor would have a view on whether poverty should be abolished or whether he was going to do anything about that pressing problem, but there was nothing on that, nothing on climate change and nothing on how he would help to deal with the competitive challenges that we will face in the future.
	I understand why the hon. Gentleman cannot do that. Over the past few weeks, he has got himself into a position where he has made promises on tax and spending that he knows he cannot possibly afford to deliver. In the space of just a couple of days at the Tory party conference he made promises on tax that amounted to some £6 billion, yet he can scarcely point to £500 million to pay for the proposals. When he knows that he has that black hole in his spending and that he is in no position to make any commitments on health, education and tackling child poverty, it is no wonder that he has completely avoided addressing any of those issues of substance. They affect each and every one of us as we enter an undoubtedly uncertain time, when we will see rapid economic change. This country will have to compete with growing economies in China, India and elsewhere in the world. Those are the big challenges that we face, yet the hon. Gentleman had nothing to say about them.

Julie Kirkbride: The Chancellor is talking about child poverty. Does he believe that poverty is absolute or relative? If it is relative, how can it be abolished?

Alistair Darling: I know this—I know poverty when I see it. I represent a pretty prosperous part of a pretty prosperous city in Europe. However, I remember when I entered the House of Commons 20 years ago that parts of my constituency in Edinburgh had nearly 25 per cent. of people out of work and a second generation of people who had never worked. The hon. Lady ought to remember that. The Conservative Government of the 1980s and 1990s damned an entire generation to failure because they allowed poverty to grow. In 1997, we had the worst record in Europe for child poverty. We are putting that right, in relative and absolute terms, and I am determined to continue to do so.

Stewart Jackson: Does the Chancellor disagree, therefore, with the right hon. Member for Birkenhead (Mr. Field), who conceded recently that the number of children in poverty, not including housing costs, went up in the past fiscal year by 100,000?

Alistair Darling: Some 600,000 children have been taken out of relative poverty, while 1.8 million children have been taken out of absolute poverty since 1998. I should have thought, as I seem to have stirred an interest among the Conservatives on the issue of child poverty, that the question should be about what we are all doing, together, to end the scourge of child poverty. We are committed to that, and I hope that the Conservatives would be, too—yet the shadow Chancellor has had opportunity after opportunity to say something about it and has said absolutely nothing.

Julia Goldsworthy: We share the ambition of abolishing child poverty, but in my constituency problems such as the fact that we have the highest water bills in the country prevent the Government from hitting their targets on tackling child poverty. Does the Chancellor agree that we need more than a one-size-fits-all approach, and that specific issues have to be tackled in specific areas, such as water bills in the south-west?

Alistair Darling: I agree that a range of issues have to be dealt with in order to help people on low incomes. Of course, one of the major things that we have done to help people on low incomes is to introduce child tax credit, of which Liberal Democrats in some parts of the country have been critical. To be fair, they are in favour of it in other parts of the country, depending on which way the wind happens to be blowing at the time. The main point is that all of us, in all parties, ought to be committed to ending child poverty. It has no place in one of the richest countries in the world. We are on the way to achieving our ambition to eradicate child poverty within a generation. I intend to do that.

Jim Devine: rose—

Michael Gove: rose—

Alistair Darling: I shall give way to my hon. Friend the Member for Livingston (Mr. Devine), who has been very patient, but then I want to make some progress.

Jim Devine: The shadow Chancellor has described the state of the economy as a tragedy. The tragedy was 3 million unemployed, 15 per cent. interest rates, 12 per cent. inflation rates and record numbers of house repossessions. That tragedy affected the people of this country, and the Conservatives were in power.

Alistair Darling: I agree with my hon. Friend, who represents an area that was on the receiving end of some of the neglect of the Conservative party's policies in the 1980s, when the mining industry declined and there was absolutely nothing in the place of it. Now, I shall give way to my old friend, the hon. Member for Surrey Heath (Michael Gove), who I remember meeting on a picket line in Aberdeen many years ago.

Michael Gove: I am grateful to the Chancellor for giving way, and for the solidarity that he showed me when we were comrades in struggle all those years ago. Talking of comrades, the Secretary of State for Work and Pensions and I attended a recent conference held by Barnardo's to discuss child poverty. The Secretary of State was asked why the £3.8 billion that could have been used to meet the child poverty target by 2010 was being used to cut inheritance tax, and he said that the Government had to appease middle England. That is calculation, not conviction. Will the Chancellor explain why he chose to follow the path of calculation, rather than the path of conviction that he is attempting to persuade us that he would rather follow?

Alistair Darling: On this occasion, I cannot stand shoulder to shoulder with the hon. Gentleman as I did against the wickedness of the then press barons of the north-east of Scotland.
	We are able to devote considerable sums of money to reducing child poverty, although we have other obligations as well. The hon. Gentleman's comments are a bit rich since, as well as our other differences on inheritance tax, he wanted to spend even more money on a tiny minority of the wealthiest estates in the country.

Rob Marris: rose—

Alistair Darling: I shall give way once more, but then I want to make some progress.

Rob Marris: I am grateful to my right hon. Friend for his generosity. May I correct him? The hon. Member for Tatton (Mr. Osborne) did set out a vision today. It was a vision of tax cuts—inheritance tax cuts, tax cuts for small business, corporation tax cuts and stamp duty cuts. The hon. Gentleman's vision is to take the country back to 1992 when in five years the national debt doubled because there were unfunded tax cuts. His vision is to take us back to economic instability. His vision is a complete failure to confront the global challenges that the country faces.

Alistair Darling: My hon. Friend is right. The Tories are getting into the business of making promises to cut taxes. I did not mention earlier that during the two or three days of the Tory party conference a few weeks ago they also promised more money for the Army and for schools, more money to combat MRSA, more money for stroke drugs and more money for high-speed railway lines. They even rivalled the Liberal Democrats in fiscal incompetence; there is no way that anyone can make those promises if they do not have the money to fund them without getting into the very difficulties that the Tories were in during the 1990s.

Bernard Jenkin: Will the Chancellor give way?

Alistair Darling: Perhaps later on, but it would be a good idea for me to make progress— [ Interruption. ] I will happily give way to the hon. Gentleman later.
	As I said earlier, the objective of the Queen's Speech is to help us meet the aspirations of the British people and to prepare for the rapidly changing new world we face. I agree with something that the shadow Chancellor said in his conference speech: we face a real competitive challenge from the emerging economies. Asia now out-produces Europe. China alone produces half the world's clothes, half the world's computers and more than half the world's digital electronics. China's and India's share of world trade has more than doubled in less than 10 years and both are looking to compete at the top of the market, not at the bottom.
	The pace of change will define our world in the future. Globalisation, which is transforming the scale of the challenges we face, means that at home in the UK and across the world we must prepare and equip our country for the future. The changes are an opportunity for us. New markets for trade are opening in the emerging economies and new jobs will come from new technologies. Britain is well placed to seize those opportunities, because we have a strong and stable economy and we can make the right investments for the future.
	In the face of such changes, people rightly look to the Government whom they elect not to stand by—as Governments have done in the past with disastrous consequences—or to stand against inevitable change, but to stand with them, on their side, preparing and equipping individuals, as well as the country, for the changes ahead. That is what the measures in the Queen's Speech do. Along with the measures that I set out last month in the pre-Budget report, they will help us to meet those challenges in the future.
	The difference between us and the Tories is that we are prepared to make the necessary changes and we have the money necessary to back up the reforms—crucially in education and skills, which are essential for the future, but also in transport infrastructure. We are introducing measures to ensure secure and cleaner energy supplies and to deal with housing. We have legislative proposals on those and other things, yet the Conservatives and the shadow Chancellor have absolutely nothing to say about them.
	At a time when we need to make fundamental changes to face the challenges ahead, we would have thought that the Conservative party might have something to say; but no—absolutely nothing.

John Redwood: rose—

Alistair Darling: I will give way to the right hon. Gentleman. Whatever else one might accuse him of, he sometimes has some forward thinking, although we may not always agree with it.

John Redwood: I am grateful to the Chancellor for his kind words. Will he tell the House which account the £23 billion to re-finance Northern Rock came from and how it will appear in the Government accounts?

Alistair Darling: I shall come to Northern Rock shortly, because some pertinent questions were asked and I want to try to deal with them. The money to which the right hon. Gentleman refers, which was lent to Northern Rock, comes from the Bank of England.
	At this time, it is important that the Government use their strength and influence to ensure that each and every one of us and all our businesses can respond to the future. That is why we have increased the amount we are spending on science and why we are ensuring that UK invention and innovation can be converted into goods and services that we can sell. That is why we are putting so much more money into universities. The situation is completely different from that of past decades, which is why, to meet our big ambitions in education and transport, we are putting in resources. The Conservatives cannot do so because they know that their promises on tax and spending are unfunded, so they could not meet the commitments that we are entering into.

Robert Smith: rose—

Alistair Darling: I give way to the Liberal Democrats.

Robert Smith: The Chancellor talks of the importance of preparing for a difficult future. From his experience at the Department of Trade and Industry he will know that the North sea sector is going through a period of transition. While world oil prices are high, the sector might be seen as attractive for investment, but the reality is that in many of the North sea fields oil is mixed with gas so the real price of oil is about two thirds that of the world price, and the costs of production are going up dramatically. Does the Chancellor recognise that we face a much more challenging time in the North sea and that we need a sophisticated approach to ensure that we maximise returns in the long run?

Alistair Darling: I am aware of the difficulties faced by the North sea field. I am particularly aware of the fact that, as gas prices have fallen, there has been pressure on some of the North sea producers. As ever, we shall do whatever we can to make sure that we get as much as we possibly can from the North sea. The hon. Gentleman and I both realise that the resources are finite, and I think we both agree that it is absolute madness for the Scottish National party to pretend that Scotland could live off the North sea. I see that the SNP leader is now claiming the entire assets of the North sea, including those that in any view of their division would not come to Scotland. However, it is important that we do everything we can to extract every last drop of commercially viable oil and gas.

John McFall: I share the Chancellor's disappointment that the long-term challenges that the country has to face have not been dealt with by other parties today. As he is aware, a few weeks ago the Treasury Committee produced a report on globalisation that indicated that we need to get on the front foot in terms of education and science, and that if we do not the UK's high-tech and professional jobs could be threatened. We have asked the Government to look into the possibility of holding an annual debate in the Chamber on globalisation in order to make us and the country aware of the challenges that we face and of the need for adequate public policy responses.

Alistair Darling: I agree. Many Members have visited China and India and I am sure that each and every one of them—no matter where in the Chamber they sit—was struck by how fast the economies of those countries were growing. There is a thirst for education and knowledge in China and India and, as I said, they want to compete at the top end of the market, not on low costs and low expectations. They want to do the same things as us. Time is not on our side, which is why it is so important not only to maintain investment in education but to make the changes that we need to improve and increase our skills standard. I absolutely agree with my right hon. Friend about that.
	The foundation for all those things is a strong and stable economy. Stability matters for individuals because it keeps interest and mortgage rates down; it also means that we can maintain high employment and that we do not return to the double-digit inflation of the past. Stability matters for the country, too; it is necessary for the economy to grow. That is why, as I have said time and again, we shall take no risks with stability. What risks stability is getting into a position of making promises that cannot be afforded. That will result either in increased taxes elsewhere or, more likely, increased borrowing, which puts pressure on interest rates. That is the last thing we need, especially at this time of international uncertainty.
	Our economy will grow this year. We and commentators believe that it will grow the fastest of all the developed countries. Inflation is around target. Of course, inflation is half what it was in the 1980s and 1990s. Employment is at records levels, and unemployment is at historically very low levels. So the difference between now and 10 or 15 years ago is that we now have a strong and stable economy, and that stability has allowed us to deal with the Asian economic slow-down in the 1990s and the problems in America in the early part of this decade. That stability, too, will enable us to deal with the current international uncertainty, which started in the American housing market and has now spread around the world—including here in Britain, of course.

Chris Bryant: I am grateful to the Chancellor; he is being very generous in giving way this afternoon. He has said two important things: first, the long-term stability of the economy is important; and secondly, we need to be a high value-added economy rather than a bargain-basement economy. However, to ensure both of those things, do we not need to ensure that we have a far more robust means of protecting our intellectual property rights, because that is where Britain will make its money in the future?

Alistair Darling: I agree, and the Prime Minister commissioned a report by Gowers last year that made a number of proposals. Not only is it important that we protect international property rights here, but it is crucial that we ensure that countries such as India and China make sure that they have corresponding rules. Great improvements have been made in both those countries. I hope to visit China in the new year, and I am quite sure that, in the year or so since I was last there, strides have been made, but if we are to achieve the breaking down of barriers to trade and greater exchange of goods and knowledge, we must ensure that intellectual property is protected.
	I said just a few moments ago that I would say something about Northern Rock. I shall preface my remarks by saying that I made a statement to the House on 11 October. I subsequently appeared before the Treasury Committee at a hearing, half of which was devoted to Northern Rock, and I shall continue to keep the House informed as and when there are developments. The Select Committee is due to complete its report in January, and I told the Select Committee a few weeks ago that, thereafter, I intend to publish proposals to reform some of the present arrangements in the regulatory system. However, I want to say a couple of things today, since the matter was raised by the shadow Chancellor.
	The information in today's newspapers appears to have come from advisers to Northern Rock; it is not the Government's policy. I can tell the House that we will very shortly issue a statement of the principles that will govern our approach to any bid to acquire Northern Rock, and when we do that, we will make them public. We shall of course be doing that because, owing to the support offered by the Bank of England and the guarantee made available to the depositors, the Government have a very real interest, and anyone seeking to acquire Northern Rock or any part of it would want to know where the Government stand. I want to make that absolutely clear. I will make sure that, as and when there are developments, I will report to the House, by either written or oral statement, as seems appropriate, because it is important that I keep the House fully informed.

John Maples: I do not know whether the Chancellor is about to leave the subject of Northern Rock—I apologise if he is about to deal with this—but I wonder whether the Government's guarantee of Northern Rock's liabilities extends to the £11 billion of medium-term notes, which have maturities of up to six years and are held almost exclusively by professional investors and traded in public markets, where they could easily have been left to trade at a discount. I believe that those notes are covered by the Government's guarantee. Is that true? If so, why?

Alistair Darling: The terms of the guarantee have been published. I wrote to the Chairmen of the Treasury Committee and of the Public Accounts Committee to set out the terms, which are intended to protect the depositors and are deliberately precise. The House will recall that the objective in my issuing the guarantee was to put it beyond doubt that, for people who were worried about their money in Northern Rock, the money was there and available if they wanted to withdraw it, and I thought it necessary to issue that guarantee to clarify the matter.
	As I told the Treasury Committee, Northern Rock is owned by its shareholders. Their directors are accountable to them. We have allowed the directors a breathing space to decide on the strategic options for Northern Rock. That is what they are doing, and it is best that they be allowed to do that, because it is in everyone's interest that we try to find a satisfactory solution.

Vincent Cable: rose—

Alistair Darling: I will certainly give way to the hon. Gentleman, especially as he has said some very unwise things, frankly, over the past few months about these things.
	It is in the interests of the stability of our financial system and of Northern Rock that it gets this breathing space, so that it can take the right strategic options for the future, because an awful lot of people depend on those judgments, particularly in the north-east of England.

Vincent Cable: Of course the Chancellor is quite right that the directors are legally responsible for the company, but why was it impossible, as a condition of the Government loan, to remove the management who had led the bank into its current disastrous position?

Alistair Darling: In some ways, the hon. Gentleman answers his own question: the company is owned by its shareholders, and they appoint the directors; the Government do not do that. Quite clearly, it is in all our interests to try to reach an orderly resolution of this matter, and that it what I intend to do, because it is important that that happens.

George Osborne: Clearly, one of the issues that is being aired in this debate is the nature of the facility that has been offered to Northern Rock and, indeed, how much longer that facility might exist. It could exist for several years if the investment bank that is advising Northern Rock is to be believed. Would it not help matters if the Chancellor now published the letter that he received from the Governor of the Bank of England and which the Governor told the Select Committee he was happy to see published? What possible reason could the Chancellor have in holding back a letter from the Governor, who is happy to see it made public?

Alistair Darling: I explained my reasons to the Treasury Committee, when I was asked that question quite specifically. I told the Committee that I received two letters: one from the Governor and another from the chairman of the Financial Services Authority, who takes a rather different view from the Governor. I have said that I am not saying that those letters can never be published, but I must have regard to the fact that I want to make it possible for the chairman and the Governor to write to me in terms that give me full and frank advice. It is not in the public interest to publish those letters. That is my judgment, and I stand by it.
	I wish to deal with another point that the hon. Gentleman touched on in his speech. One of his colleagues issued a rather misleading press release in relation to Government support. I told the Treasury Committee that the facilities are being offered to Northern Rock. We have said that we want proposals to come back from Northern Rock by the end of January or the beginning of February. It is not true to say that we have said that the facilities would definitely come to an end at that stage. We have said that the facilities are there, but that we must reach a situation in the next few weeks where it is clear what will happen to Northern Rock. I was asked that question by the Treasury Committee, and I gave the reply in that context. I am sure that the hon. Gentleman will be keen to clarify the press release that his colleague issued earlier today.

Colin Breed: The Chancellor has made an important announcement that he will make a statement of principles. Should not the situation trigger the suspension of shares in Northern Rock, bearing in mind that they have been up and down after almost every announcement so far, with people saying that they will take over the management or the business? That is a most important statement. Is it not essential that the shares in Northern Rock should be suspended?

Alistair Darling: No, I do not think so. That is a logical extension of the Government's position from the start. I will keep the House informed in relation to Northern Rock, but it is important that we turn our attention to the central legislation in the Queen's Speech.
	As I was saying earlier, if we are to rise to the competitive challenge that we now face, it is important, among other things, that we continue to deliver more jobs. We must therefore increase the number of university graduates, and we need higher and higher skills. It is worth bearing in mind that although every year Britain adds about 75,000 engineers and computer scientists, India and China add half a million. We turn out 250,000 graduates, but India and China now graduate 4 million, more than all of Europe and America.
	Today, the economy has 9 million highly skilled jobs; we should bear in mind that by 2020 it will need 14 million. Furthermore, of today's 3.4 million unskilled jobs, fewer than 600,000 will be needed by that year. That alone should make every Member see the need to invest in our education and skills. The education and skills Bill in the Gracious Speech will increase for the first time in 30 years the time that people are expected to stay in education, and will benefit 2 million young people. It will also give those who missed out the first time the opportunity to catch up and improve their education.
	Furthermore, a draft Bill will propose the reform of apprenticeships as we head towards our commitment to ensure that every young person who wants to continue their learning while in work can do so. Half a million people will be in apprenticeships by 2020. That will be a step change in what we are doing in education, and I hope that the Conservative party will support the Bill. We will wait and see.
	Surely there should be agreement between us on the number of people who ought to be going to university and on the need to increase skills in this country. However, so far there has been precious little evidence of such support. My old sparring partner and fellow picket line attendee, the hon. Member for Surrey Heath, is not here; he has gone off to another picket line for all I know. He has been extremely critical of the measures to enable people to stay on in education and of the diplomas that my right hon. Friend the Secretary of State for Children, Schools and Families introduced a few weeks ago. We are entitled to ask why the Conservatives will not support us on those key measures, which are so important to our country's future.

Chris Grayling: rose—

Alistair Darling: Perhaps the hon. Gentleman will tell us.

Chris Grayling: Does the Chancellor agree with the former Secretary of State for Work and Pensions and Home Secretary, the right hon. Member for Sheffield, Brightside (Mr. Blunkett)? Last week, he said on "Any Questions?":
	"I am against the idea of suggesting that deeply damaged men and women could somehow be fined and it would make them go into education and training. I think it's cloud cuckoo land."

Alistair Darling: Making sure that people stay in education to ensure that they have the necessary skills and qualifications would achieve something that we all agree is necessary: dealing with the generation of people who are not in education or employment, but could be with the right skills and support. That is important.
	Let me turn to another matter on which the Conservatives had absolutely nothing to say. If we are to meet the challenges, we need to improve our infrastructure, make sure that our forms of energy are more secure and greener, and put in place other measures—for example, increasing the housing supply. Yet there has been absolutely nothing from the Conservatives on those issues.
	For example, the Crossrail Bill, which is now going through another place, will introduce the largest transport project in Britain, certainly since the channel tunnel. That is in addition to our doubling transport investment and providing transport spending over a 10-year period. The energy Bill will allow us to meet our obligations on renewables, put in place carbon capture and storage measures and introduce the new nuclear power stations, if the Government's consultation decides that we should proceed in that way.
	Those are examples of how we are planning for the future. That is also the case for housing: we are building 3 million more homes. Members rightly stand up and say that their constituents are having difficulty in getting housing; well, a substantial part of the answer must be to build more housing. Where do the Conservatives stand on those issues?

Brian Binley: rose—

Alistair Darling: Perhaps the hon. Gentleman will tell us.

Brian Binley: No, but I will ask the Chancellor about his statement that the Crossrail Bill will involve a massive investment. We have already seen it rise from about £6 billion to a massive £16 billion in just 18 months. What is the Chancellor's view of how much Crossrail will have cost by the time we have built it? What will the investment have amounted to then?

Alistair Darling: I grant to the hon. Gentleman that it would have been much better if Crossrail had been built in the 1990s, before the Conservative Government scuppered it. Had they not, it would have been open and running. By its very nature, Crossrail is an expensive project. My right hon. Friend the Secretary of State for Transport and others are working hard to get the costs down. However, it is important that the project is put in place, just as it is important that we have the energy and the housing and regeneration Bills.
	There is one further measure on which the Conservative party is all over the place in policy terms: the planning reform Bill. We will not get new transport infrastructure, the energy supplies that we need or large-scale housing unless we reform the planning system. Yet the Conservatives have absolutely nothing to say about that—no wonder, when we look at their policy on energy. What is that policy? Did the shadow business and enterprise spokesman state it when he said that he did not think that we were doing enough to get more nuclear power stations, or was the policy set out when the leader of the Conservative party said that nuclear should be only a last resort?
	Surely one must prefer the statement from the right hon. Member for Witney (Mr. Cameron), who is leader of the party after all. Yet how can a policy that does not say whether a party is for or against nuclear power be justified? Whatever side people take, they have to have a view on such an issue. It is pressing and urgent, yet the Conservative party is completely incapable of addressing it because it does not know where it stands.

John Redwood: rose—

Alistair Darling: At least the right hon. Gentleman knows where he stands, although I am not sure whether he will reflect Tory party policy or not on this occasion.

John Redwood: I was going to help the Chancellor with a useful suggestion. I have proposed that the Government should immediately hold a competition between all the low-carbon and no-carbon technologies to see which—or what mix of them—would be cheapest and best. In that way, we could make an informed decision.

Alistair Darling: I leave the right hon. Gentleman to commend that approach to the leader of the Conservative party.
	Earlier this year, we set out our proposals in the energy White Paper. We are clear that there needs to be a mix—with consultation, of course, on whether nuclear ought to be part of it. I have made my position on that clear on a number of occasions.
	As I said earlier, one of my major criticisms of the shadow Chancellor's contribution is that he completely omitted to mention the two big challenges that we face: child poverty, which we discussed earlier, and climate change. Let me say this on the need to eradicate poverty and get more people into work. We know that the Conservative party was against the new deal and that it has a visceral dislike of tax credits and some of the other measures that we have put in place to help people. Yet on the issue of getting people off incapacity benefit and into work, it seems to be saying that it will abandon the steps that we are taking and instead place all our hopes on doing it on a voluntary basis.
	The Conservatives have to understand that if we want to make inroads on the number of people on benefit, money has to be spent up front. There is a financial commitment; there is no way of getting away from that. Whether in Wisconsin or Australia, Governments have accepted that money needs to be spent. The Conservatives also need to accept that the process does not produce millions or billions of pounds immediately; a long-term commitment and process are involved. We are now seeing the incapacity benefit rolls falling because we stuck the course for 10 years. The Conservatives are making promises, which they say they can pay for, on getting people off incapacity benefit when they know, and everyone tells them, that there is not a hope of getting that money in anything like the timescale that they would need to avoid a hefty increase in Government borrowing. That is why their policies simply do not stand up and do not bear scrutiny.

Chris Grayling: rose—

Alistair Darling: The shadow Chancellor seems reluctant to intervene, but I shall give way to the hon. Gentleman.

Chris Grayling: Can the Chancellor explain why, given all the billions of pounds spent on the new deal for young people, the number of 16 to 24-year-olds registered unemployed is higher now than it was 10 years ago?

Alistair Darling: We recognise that it has been difficult to get people from that group into work, although their population has increased as well. However, the big difference is that during the past 10 years unemployment levels have been a fraction of what they were in the 1980s and 1990s. The hon. Gentleman says that the new deal has not worked, but it has—it has seen hundreds of thousands of people back into work. The Conservatives cannot even tell us how long their proposals on getting people off incapacity benefit and back into work would take to implement. The shadow Chancellor, when interviewed by Mr. Naughtie on the "Today" programme, was asked how long it would take. The reply was, "I'm talking about, you know, two or three years." When the hon. Member for Epsom and Ewell (Chris Grayling) was asked about it on a different programme, he said that it would take four or five years. The truth is that they have no idea when they would get the money in, yet they are prepared to make promises on tax credits based on the back of money that they do not actually have.
	That takes me back to the point that I made right at the start—the Conservatives' sums do not add up. That is why they cannot stand up and give us commitments on eradicating child poverty. They have never yet said that they would sign up to the target and the commitment to which we have signed up. They cannot give us commitments on other major spending because they have a black hole in their spending plans, and they know it.

Stewart Jackson: The Labour party's campaigning mantra over the past 10 years about black holes is wearing extremely thin, and it does not wash with the public. If the Chancellor is so proud of his record, can he explain why in the last financial year under this Labour Government the weekly income of the poorest 10 per cent. of this country's population has fallen?

Alistair Darling: I would have more sympathy with the hon. Gentleman's comments if he supported us in our policies on tax credits, increases in child benefit and other measures that are designed to help people on low incomes to increase them. We have been increasing their incomes; the Conservatives have absolutely nothing to say about it.

Si�n Simon: Does the Chancellor agree that perhaps an explanation for the metaphorical chaos of these black holes that will not wash because they are too thin lies in the methodological chaos about which he has been so eloquent, whereby the shadow Chancellor made up his non-doms policy on the basis of an article that somebody read in the back of a Sunday supplement?

Alistair Darling: My hon. Friend is absolutely right.
	This debate has demonstrated that the Conservatives are in no position to set out their vision for the future of this country or of this country's economy because they are not in a position to make the necessary investment that we need in order to meet the challenges that we face.

Gerald Howarth: Will the Chancellor give way?

Alistair Darling: Not just now.
	The Conservatives have nothing to say about the future key issues that face us because, right at the heart of their plans, there is a gap between what they are promising to spend, whether in tax reductions or other spending commitments, and the amount of money that they could get in. They cannot make those promises because there is a flaw at the heart of their economic policy. The hon. Member for Peterborough (Mr. Jackson) might say that the public will not focus on that, but I can assure him that they do focus on such things because they are very weary of people who make promises that they know they cannot afford to keep.

Several hon. Members: rose

Alistair Darling: I give way to the nationalist, for the sake of fairness.

Stewart Hosie: I thank the Chancellor for being so gracious.
	Perhaps the Chancellor can clarify the situation as regards black holes. Is the black hole the 540 billion cumulative deficit forecast for the UK this year? Is it the 38 billion of borrowing forecast for this year, up 4 billion on the previous forecast? Is it the 179 billion of liability for only 53 billion of PFI capital expenditure, with liability interest having risen by 55 billion in the past three and half years, which is more than the capital sum of every signed deal? Where is the black hole in relation to the devastating debt created by this Government?

Alistair Darling: The black hole that the hon. Gentleman should be bothered about is his party's policy of hitching itself to revenues from North sea oil and gas that are likely to last 20 or 30 years, not 200 or 300 years. He might also like to address the question of why many of the promises that his party made in the May Scottish elections are now being dumped one after the other because it cannot deliver on them.
	The difference between us and the Conservatives is that for 10 years we have had a strong, stable economy that has enabled us to make the necessary investment in the services that we need.

Gerald Howarth: Will the Chancellor give way?

Alistair Darling: No, I will not.
	The Queen's Speech introduces measures to enable this country to meet the challenges of the future. The Conservatives have absolutely nothing to say on the long-term future of this country, whereas we have the vision, the commitment and the means to deliverthat is why the Queen's Speech should be supported tonight.

Julia Goldsworthy: We have heard a lot of talk about vision today, as we did in the run-up to the Queen's Speech. One would have thought that given that this subject is the new Prime Minister's former portfolio it would be the key area where we would see the heart of his vision. However, anyone who was eagerly anticipating today's debate should have learned their lesson from the Prime Minister's last Budget as Chancellor. In the run-up to that Budget, we were promised that he would flesh out the vision for his planned premiership. The reality was a let-down. His last Budget was long on superficial and eye-catching proposals but short on vision and fairness. There was nothing to tackle the unfair council tax and nothing to simplify the tax system. As a country, thanks to the Prime Minister, we are now the proud owners of the longest and most complicated tax code in the world. His proposed changes to income tax leave millions of people on low incomes paying a higher marginal rate of tax through the abolition of the starting rate which he himself introduced.
	The Chancellor spoke today about child poverty and the importance of tackling it. Many millions of the people who will pay higher rates of tax because of the abolition of the starting rate have children who are part of exactly the group that the Chancellor says that he wants to get out of poverty. He may well say that child tax credits and other benefits will help to lift those people out of poverty, but the problem is that the take-up of many of those benefits is very low, and the system of overpayments is leaving many of my constituents with significant difficulties. There is no visionat best, a sleight of hand, which we will debate in next year's Finance Bill, as announced in the Queen's Speech.
	The Chancellor is right that we have had 10 years of relative stability, thanks in no small part to the decision to make the Bank of England independent, which we supported at the time. However, in the months following the Prime Minister's last Budget as Chancellor, it has become increasingly evident that our economy is increasingly exposed to uncertainty. Repossessions are on the increase, oil prices are rising, there is a credit crunch in the US, over the summer we had the experience of Northern Rockthe first run on a bank for more than 140 yearsand only yesterday the Royal Institution of Chartered Surveyors spoke of house prices beginning to fall. Weaknesses in our economy are becoming exposed. Now, more than ever, we have a need for vision, but instead the Government are responding to events instead of anticipating them, and tinkering around the edges without tackling the fundamentals.
	What makes matters worse is that the Conservatives seem happy to join the skirmishes rather than seek to provide their own vision. In the opening debate on the Queen's Speech, the Leader of the Opposition proudly said, when referring to the Prime Minister's plans to change flight taxes, inheritance and non-dom tax:
	it was our vision, not his.
	He went on to add:
	The difference between our policy and the Prime Minister's is that we thought of it and he stole it.[ Official Report, 6 November 2007; Vol. 467, c. 20-33.]
	What an outstanding achievement for the Opposition.
	The Liberal Democrat Treasury team have invested substantial time in developing proposals in these areas.

Stewart Jackson: No one noticed.

Julia Goldsworthy: Obviously, the hon. Gentleman's Front Benchers noticed when they came forward with their proposals, as was acknowledged earlier.
	We have long called for a tax on aviation. We considered ways in which non-doms could pay their fair share. We had proposals that reconsidered inheritance tax; I seem to recall that it was the Liberal Democrats, not the Conservatives, who raised that issue in relation to this year's Finance Bill. We have a consistent track record on this, not the sudden revelation that seems simultaneously to have struck the Conservative and Labour parties. However, such proposals in themselves do not constitute a visionthey have to be part of much more comprehensive proposals, which we have put forward, to make the tax system simpler, fairer and greener. I am sorry to point out to the Chancellor that proposals alone do not add up to vision, and I am sorry to point out to the hon. Member for Tatton (Mr. Osborne) that simply saying, We got there first, does not constitute a vision either. The hon. Member for Rhondda (Chris Bryant) mentioned intellectual property rights. If there were intellectual property rights on policy, we would be a very rich party.
	Let me look at the proposals in more detail. On inheritance tax and non-doms, there is a poverty of wider vision. The Government's proposals offer nothing that was not already available to people who were able to access advice on tax planning. It is a welcome simplification in some respects because it means that people will not lose out because they did not understand the rules, but it comes at a significant costas the Blue Book showed following the pre-Budget report, 1.4 billion by 2010. The Conservative proposals to raise the inheritance threshold to 1 million are superficially similar but even more expensive. In both cases, a flat charge on non-doms will not be sufficient to meet the cost, and it will end up crippling essential workers while other non-doms, such as Lord Ashcroft, will hardly notice the differenceit is barely equivalent even to the amount of money that he might spend in one target seat. It is nothing short of irresponsible scaremongering for the Conservatives to claim that 37 per cent. of people will be affected by inheritance tax. It is based on dubious research, which was commissioned by Scottish Widows but subsequently removed from its website. The research showed that 37 per cent. of people owned homes worth more than 210,000. An assumption was then made that they would have assets worth more than 94,000 and that they would not need to sell their homes to make up for inadequate pension provision. Some people will be in that lucky position, but certainly not 37 per cent. of all people, let alone homeowners.
	Most importantly, neither of the sets of inheritance tax proposals do anything to address the greatest inequality in the inheritance tax system: the fact that the richest of all manage to get out of paying it altogether. The number of estates worth more than 1 million that pay inheritance tax has actually fallen in the past few years. Ultimately, if a person is wealthy enough to employ the right tax adviser, they can ensure that they end up paying no inheritance tax at all. Neither the Government's nor the Conservatives' proposals will ensure that those with the most valuable estates get the same treatment as everyone else. That is why our proposals on inheritance tax were set in the context not only of changes to non-dom tax treatment, but of looking again at the lifetime gift rule. A person with assets other than their house will find it easier to give them away tax free, provided that they do so seven years before their death. That is why we want to change the time limit and invest those proceeds in lifting the inheritance tax threshold. Our proposals would ensure that inheritance tax changes are not caught by fiscal drag and they would make the system fairer as well.

Chris Ruane: Will the hon. Lady inform us what the time limit would be?

Julia Goldsworthy: We put forward those proposals during consideration of the Finance Bill. We were trying to make them more sustainable, so that there would be a better relationship between dealing with the matter and the lifting of the threshold than there would otherwise. The Chancellor's proposals will tackle the issue partially, but as I said before, they do not deal with the fundamental fact that the number of estates worth more than 1 million is actually decreasing.

George Osborne: I am sorry to have to follow up a question from a Labour Back Bencher [ Interruption. ] Well, it is a bit of give and take. They follow my tax proposals, I follow their questions. What is the time limit? Would there be a situation under Liberal Democrat proposals, if they were ever to produce a Budget, where a car given to a grown-up child by a parent would count later on for inheritance tax purposes?

Julia Goldsworthy: No, I do not think that that would be the case at all. Given the context that life expectancy is rising, the matter should be looked at again. I will not have any of the problems the hon. Gentleman's Front-Bench colleagues will have in dealing with the issue during consideration of the Finance Bill.
	The capital gains tax proposals are a wasted opportunity because there is a chance to have a much wider debate, rather than the narrow one we will have on the proposals brought forward by the Government. It seems that those proposals were part of the frantic preparation for a general election that never was, and perhaps that is why the Treasury thought that it would be able to get away with them despite the fact that they are so flaky. It is right in principle to simplify the system, but I wonder whether that was the primary motivation of the Government in introducing their proposals. Let us not forget that taper relief was the Prime Minister's creation in the first place.
	Proper scrutiny will be needed of whether retirement relief will be made available. There was an indication that it might be in an interview with a newspaper, but as the hon. Gentleman made clear in his comments, small businesses need certainty because they may be making decisions in the next few months about how they treat their businesses. It is clear that the proposals will create some ridiculously perverse incentives. In my constituency, second home ownership is a significant issue in many communities, and second home owners will receive a tax cut as a result of the proposals. It worries me that more and more people will consider home ownership as a way of investing money and getting a tax break; we will not have a fair tax system.
	There is a real need for debate, but the question is one of the distinction between capital and income. For a lot of people, that distinction is becoming increasingly blurred, and people make decisions based on how much tax they think they will pay. Our concern is that the proposals will make matters worse. What impact will the way in which the Government dealt with the issue have on share ownership schemes, for example? Before, there was an incentive for longer-term investment, but now that has been removed, and a lot of higher-rate taxpayers will have an incentive to shift more into capital rather than income.
	There was an opportunity for a much more fundamental look at the tax system with regard to how capital and income are treated, and that opportunity has been wasted. The Government are pre-empting an argument, rather than opening up a debate. The irony of the position of the Conservative Front Benchers is that their party opposed the introduction of taper relief in the first place, and they are now opposing its abolition. We hope to use the opportunity of the debate on the Finance Bill to raise the issue more widely.
	The banking system legislation proposed in the Queen's Speech was not included in the pre-legislative teaser that the Prime Minister gave us before the summer recess. It is a reaction to the events concerning Northern Rock during the past few months. It will improve the current framework for dealing with banks in distress, and will include arrangements for deposit protection. It is necessary and right that the deposits of investors are guaranteed to protect against runs on financial institutions. However, what is the genuine motivation behind the proposals? Is it to support savers, or to protect the economy by backing up our banks? It certainly will not offer any comfort to those affected by the Equitable Life scandal or, for that matter, people who invested in Farepak last year and saw their savings disappear.

John Maples: I may have misheard the hon. Lady but I think that she said that it is right for the Government to guarantee depositors. Is she saying that the Government should guarantee all the liabilities of the British banking system? That seems to be what she is saying.

Julia Goldsworthy: No, absolutely not.

John Maples: What is she saying then?

Julia Goldsworthy: Up to 30,000. That is the issue we shall discuss when the legislation is introduced.
	Let us hope that the legislation will make it clear that the Government will not become the lender of last resort without the condition that the board of management are dismissed. We shall focus on that issue when we consider the legislation. Again, however, important wider issues are not being discussed, such as the need to ensure that banks adhere to fair and responsible lending practices; the implementation of the recommendations of the Cruickshank report; and a more detailed look at the tripartite relationship between the Financial Services Authority, the Bank of England and the Treasury. The FSA needs real teeth; the Northern Rock affair has undermined its authority.
	The risk of moral hazard, which was raised by the Bank of England, must be addressed, and the Treasury and the Chancellor must show decisiveness. Will the Chancellor admit that his hesitation in announcing deposit insurance for savers added to the numbers we saw queuing to withdraw their funds from Northern Rock? The Chancellor's actions on that issue do not inspire confidence. Much of the action in the aftermath of those events has been unsatisfactory, not least today's refusal by the Prime Minister and the Chancellor to be open about the value of loans that are being offered to Northern Rock, or the question of whether any interest will be written off. There is a huge question of whether that constitutes state aid. I welcome the Chancellor's announcement that he will bring forward clearer proposals, but given that public money is involved, it is in the public interest for information to be made available.
	On the pensions Bill, we are concerned that the consensus is in danger of falling apart. The Liberal Democrats proposed the idea of personal accounts several years ago, and we want them to be a success, but that means addressing crucial issues, which means requiring the Government to change their position. We do not want to give up on the idea that consensus is possible, but the Government must accept that that requires give as well as take. At the moment, the consensus is undermined by the Government's failure to address the backdrop to the pensions proposals.
	Turner made it clear in his report that his proposals had to be adopted as a package, not cherry-picked. However, as the right hon. Member for Birkenhead (Mr. Field) said in the aftermath of the Turner report, the Government's proposals appear designed to get them through the next seven days, rather than the next seven decades.

Peter Hain: The hon. Lady said that there should be give and take, and referred to Lord Turner. He supports the Bill in its entirety, as do the entire pensions industry, the CBI and many others. I am grateful for her colleagues' contribution to the issue, but what does she mean by give and take?

Julia Goldsworthy: I am pleased that the right hon. Gentleman has intervened. We have concerns about three areas, in which we feel that some of the points highlighted by Turner have not been comprehensively adopted. First, Turner made some clear remarks on means-testing. We are concerned that the continuation of means-testing will undermine confidence in personal accounts.
	People will be right to question the point of investing savings in a personal account when all that will achieve is simply lifting them just over the threshold that will entitle them to, for example, other means-tested benefits. They will ask, Are we saving for ourselves, or to save money for the Government? By 2050, 45 per cent. of pensioners will still be dependent on means-testing. That is a crucial weakness, which my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) will pursue when dealing with the measure.
	The second point ties into a wider issue about ensuring that people can access high quality, generic financial advice. It will not be worth some people's while to invest in a personal account because they have significant personal debts. It would not be financially rational for them to invest in the long-term when they have significant debts that are at a higher rate of interest. They need to be able to access advice, and we are worried that the proposals that we have seen so far do not include a package to deal with that.
	We are also worried about the delay in the restoration of the link with earnings, which will result in continuing means-testing and undermining the incentive to save. The Conservative response to all that is inadequate to say the least. It is all very well saying that people can get their money back if it is not worth their while to contribute. However, who will make that judgment? Would not those people prefer to have the money when they earned it rather than having to wait until they retire for a rebate? It seems as though the point is being missed. I hope that there will be constructive dialogue on tackling some of those issues.

Rob Marris: The hon. Lady began her speech by talking about other parties stealing her ideas and then went on to say that wider issues require consideration and that we need to examine this, that and the other in more detail. She is scattering ideas, not policies. Policies need to be juxtaposed and have some consistency. They also need credibility. She reminds me of the famous sketch with Eric Morecambe and Andr PrevinI'll play the notes but not necessarily in the right order. Her vision seems to extend only as far as seeing the pianonot even to playing a single policy note.

Julia Goldsworthy: Our pensions policy is a classic example of vision: a citizen's pension and restoring the link with earnings as soon as possible rather than delaying it for a long time into the future. The policy will ensure that people in Britain have real certainty about their future.
	It concerns me that the Prime Minister was up to more of his usual tricks in the Queen's Speech. What is often paraded as simplification hits people's pockets. Subjects that we will consider in this Session's finance Billa cut in the basic rate, funded by abolition of the starting rate; changes to capital allowances for small businesses dressed up as simplificationappeared in the last Budget. However, they are incomplete. We have seen only part of the proposals, with a promise of more later. Capital gains tax simplification happens to raise significant amounts of money.
	The Chancellor said that one of the points that the Conservatives had missed in their remarks on the Queen's Speech was the environment and green taxation. He then proceeded not to mention it again for the rest of his speech. It is interesting to note that some work is being done on the proposals in the pre-Budget report. I understand that they are set to raise 500 million. However, the Treasury gave no indication of the exact mechanisms that will be put in place to achieve that. Again, it all seems very short-term.

Chris Ruane: Where is your policy?

Julia Goldsworthy: We have a series of proposals that are readily accessible on the party's website. However, we are currently dealing with the legislative programme that the Queen's Speech outlines and I am trying to limit my remarks to that.
	All the proposals raise billions of pounds but nothing indicates a clear simplification programme. The cuts hardly increase fairness, and there is no clear statement of simplification or that it will be made on a tax-neutral basis. That does not inspire confidence.
	The national insurance contributions Bill is another example of what I have described. Again, we support the principle because it makes sense for national insurance contributions and income tax thresholds to align, but there are cost implications for the amount of tax that people pay. Why could not the Treasury be up front about that? Why could not the Treasury be explicit and demonstrate that the policy is designed to make the tax system fairer and simpler, rather than being an underhand way in which to raise revenue.

Peter Bone: I have listened to the hon. Lady's comments with great interest. However, the Liberal party tabled an amendment that has not been mentioned. When did the Liberal party decide that its contents were a good idea? What is its importance?

Julia Goldsworthy: The amendment was mentioned in the foreign affairs debate. If the hon. Gentleman was present, he will realise that it was discussed in some detail. Today's debate is about the economy and pensions. Obviously, we will have the opportunity to discuss the matter at great length when we debate the constitutional reform treaty. The amendment will be pressed this evening, after that of the official Opposition.
	We agree with the Government about some matters. For example, we believe that the measure on dormant bank and building society accounts makes sense. However, again, I wish that the Government had done more to make their thinking explicit. Although we agree with the principle that the money should be made available for youth projects, I am worried that it has accrued over a long time and that, if it is treated as revenue, it will not go as far as or help the projects in the way in which it should. Clearly, those issues will have to be ironed out, even though we support the principle.
	I am most concerned about the Government's silence on an issue about which they have consulted widely and about which reports have been written, but as yet, no action has been taken. It is a tax that everyone pays every year, is not related to the ability to pay, and increases consistently at a rate above inflation. If the Prime Minister wants to demonstrate vision, he could do so by taking a comprehensive look at the council tax because the position of local councils is becoming increasingly unsustainable.
	The Chancellor mentioned in his pre-Budget report the fact that he was expecting the council tax to increase by up to 5 per cent. in the next three years. That rate is significantly above inflation. Today, the Conservatives let the Prime Minister and the Chancellor off the hook because they have no ideas on the matter. They have written off every other idea. For a moment yesterday, when I listened to the radio, I got excited. I thought the Conservatives might have something substantial and interesting to say. I should have known better. Even one of their council leaders when referring to the new big idea on referendums on council tax increase could say nothing better than It's a start.
	On  The Guardian website today, Simon Jenkins said:
	The Tories for their part lack almost as much bottle as Labour. Cameron clearly suffers the same 'Treasury capture' by George Osborne as Blair did by Brown. Yesterday he unveiled his localist big idea and it was a mouse, reviving Michael Heseltine's 1981 local plebiscites on tax levies above a centrally capped limit.
	Local government can hold referendums on whatever and whenever it wants. All that does is centralise funding; it does nothing to localise funding. It does nothing to tackle problems that the Lyons report clearly identified. We need clearer action. It looks as though it is down to the Liberal Democrats to provide that vision and we are happy to do so.

Stewart Hosie: I am listening carefully to the hon. Lady's comments about council tax. Do I take it that her colleagues in Scotland will back the Scottish Government's Budget today to freeze the council tax as part of the move towards implementing a local income tax?

Julia Goldsworthy: We certainly welcome moves towards a local income tax, but it is not for us here to dictate what Members of the Scottish Parliament should say.
	Our axe the tax proposals to get rid of council tax and replace it with a local income tax are part of a package, as are our pensions proposals. We have a vision of a tax system that is fairer and simpler, and a pensions system where people know what to expect. In both cases, the packages are fully worked through and designed to inspire confidence, not arouse suspicion or generate confusion.
	Such vision is sadly lacking from Conservative and Labour Members, as demonstrated by their remarks today. The sad thing for the Prime Minister is that he had vision once. The proposal to make the Bank of England independent, which was put forward when he was first Chancellor, and which we supported, demonstrated that. However, now the Prime Minister is Old Mother Hubbardhe goes to the cupboard only to find it bare. The world today is a very different place. As a country, we must face up to a new economic outlook. Mechanisms are needed to deal with instability in the housing market and the looming problem of large numbers of people who may not be able to maintain their mortgage and risk losing their home.
	Mechanisms are needed to translate the Chancellor's homilies about responsible and old-fashioned lending into practice. Those mechanisms require vision from the Government. Instead, they are just hanging on, waiting desperately for good news. The Conservatives are happy to wait with them because when there is no good news, they seem to think that simply saying I told you so is sufficient. Liberal Democrats know that they are both wrong.

Michael Meacher: The Queen's Speech has far too readily been dismissed as lacking any forward movement. I strongly disagree. It is good that after two decades of neglect of social housing, amidst the triumphalist ideology of private ownership, the national scandal of huge unmet housing need is at last being addressed. Extending flexible working to millions more people is an important contribution to personal freedom and to achieving a better work-life balance for a nation that has the longest working hours in Europe. It is also surely an important ambition to make training and education mandatory for all under-18s, because the low qualifications with which so many of our children and young people leave school are one of the major factors holding them and the nation back.

Lorely Burt: Will the right hon. Gentleman give way?

Michael Meacher: I have a lot more to say, but if the hon. Lady wishes to intervene at this stage, I shall take her intervention.

Lorely Burt: I am grateful to the right hon. Gentleman for giving way so early in his speech. He mentioned flexible working, and I introduced a Bill in the previous Session to do exactly the same thing that the Government now propose. Although we welcome the fact that flexible working is being introduced in interim stages, does he agree that we should consider this as part of a long-term strategy to ensure that all workers in the United Kingdom have the right to request flexible working?

Michael Meacher: I think that that is implied. A better work-life balance, not just for women but for men, too, is gravely lacking in this country and that is one of our biggest drawbacks. I repeat that we have by far the longest working hours, so I welcome what is proposed and I accept the vision that the hon. Lady described.
	The Government need some commanding themes by which their distinctive vision can be clearly understood. I want to propose three. The first is democratisation, which my right hon. Friend the Prime Minister adumbrated in his first statement to Parliament, and extremely welcome it was too. However, democratisation must stretch a great deal further than giving Parliament a right to vote before the country goes to war, as I think he realises. Parliament needs real new powers on a much broader front. Some examples include powers to elect Select Committee members and ratify Cabinet nominations made by the Prime Ministerthat is not a particularly traumatic proposal, because something similar already happens with congressional hearings in the United States. Other examples are the power to approve the membership and terms of reference of committees of inquiry proposed by the Prime Minister and the power to set up our own parliamentary commissions to investigate particular issuesa recent example about which I feel strongly is extraordinary renditionwhen the Government refuse to do so.
	However, it is not just in Parliament that there is a democratic deficit. An even bigger one now exists outside. Over the past 30 years power has become so centralised and the regulatory authorities gradually so enfeebled that, so far from corporate power being regulated, the biggest businesses have increasingly co-opted the powers of the state for their own commercial ends. Let me give a few recent examples: the current loosening of controls over power station, airport and incinerator developments, which are part of the Queen's Speech; the failure to regulate unhealthy food advertising because of objections from the food industry, despite the growing obesity epidemic; the notorious withdrawal of the Serious Fraud Office investigation into allegations of corruption against BAE Systems; and the relaxation of the gaming laws to permit a flood of gambling casinos.
	It sometimes seems as though accountability has all but vanished, at least in some parts of this country. Perhaps the most telling example, which has already been discussed at length today, is Northern Rock. The crisis is now costing 23 billion in loans from the taxpayer, plus, I understand, a 2 billion interest chargealmost equal to the entire annual defence budgetand yet nobody is held responsible. The Bank of England, the Financial Services Authority and the Treasury are all blaming each other. What action is being taken, and by whom, to face up to the fundamental mistakes that led up to the crisis, including the reckless lending practices of the chief executive of Northern Rock and the flawed structure of regulation put in place a decade ago?
	The question has to be asked: why was Northern Rock not temporarily taken into public ownershipnot back into public ownership; it was never in public ownershipas was done in the secondary banking crisis in 1974, in order to avoid a run on the bank and retain depositors' confidence without such a colossal haemorrhage of public funds? The answer, which says something significant about the structure of power in our country, is that the neo-liberal agenda of deregulation, privatisation and unfettered markets is, unaccountably, still being imposed above everything else, even at phenomenal cost to the taxpayer, so that public ownership is not seriously mooted as an alternative.
	This issue has not yet been touched on, but what action are the Government going to take to address the mania for securitisation, collateralised debt obligations and all the other opaque and dodgy financial derivatives that have so dramatically and comprehensively destabilised the markets? Despite all their deregulating instincts, do the Government not acknowledge that stricter regulation of the financial markets is now necessary if the frenzyit will no doubt go into abeyance for a time because of the current crisis, but it will returnfor newfangled financial instruments that are deliberately designed to be deceptive about risk and value is to be curbed?
	That is all about one section of societythe lite endbut what about the other end? There again, the checks and balances against the arbitrary use of power have been and remain severely restricted. Civil liberties have been eroded, as we are all aware. The introduction of ID cards and two months' detention without charge, both of which I deplore, are still being mooted. Workers who have been in their jobs for less than two years can still be arbitrarily dismissed without any rights, while temporary and agency workers remain an exploited underclass. Of course, that is mainly at the behest of the CBI; and if I may say so, the Government should stand up to the CBI rather more resolutely. Accountability or, indeed, any redress for alleged misdemeanours by the police, judges, banks, private utilities or big corporations is, as all hon. Members will know from their surgeries, often hard to get, if not almost impossible. It is not unfair to say that powerlessness is widely felt to be endemic throughout society. I believe that the Prime Minister and the Government want to deal with that, but doing so will require a great deal more than focus groups or citizens' juries.
	A second commanding theme that the Government this Labour Governmentshould prioritise is a fair, balanced, participatory society. That means dealing with the scandalit is no less than thatof excessive inequality that has now reached grotesque levels. The Chancellor was absolutely right to say that the Government have a highly creditable record on child poverty. They have reduced it by more than 600,000 from the record level of 3 million that it reached under the Tories, and they have made it clear that they intend to go much further. The problem is that, while poverty has been reduced, the income and wealth of the rich have increased disproportionately, and inequalities have therefore grown. We have now reached a position in which a worker on the minimum wage gets about 200 a week, and if he happens to work for one of the top FTSE 100 companies his boss will be getting a staggering 70,000 a week, according to the latest surveys. That is 350 times more. I defy anyone to justify that.
	Given the present private equity excessesthey will no doubt be blunted by the banking crisisand the fact that capital and business taxation is at its lowest for a century and direct and indirect taxes are now pretty regressive, we are now in danger of returning, unless we are very careful, to the polarisedincome-polarised, at leastclass system of the Edwardian era. Redistribution is a taboo word that has been banished from the political vocabulary for far too long, but it needs urgently to be reintroduced. It was not helpful that in the pre-Budget report the 6 per cent. richest in our society who pay inheritance tax were handed a gain of some 1.4 billion a year, while working tax credits for the poorest children were increased by only 40p a week.

David Gauke: Will the right hon. Gentleman give way?

Michael Meacher: I will, but I have to say that the hon. Gentleman's own party has very little right to intervene on this matter, on which it so badly misbehaved during its 18 years in office.

David Gauke: One of the changes in the pre-Budget report that will favour some of the wealthiest in society is the reduction in the capital gains tax rate that will apply to non-business assets. That will mean that those of us who own second homes will be paying less capital gains tax on any profits made on those properties. Does the right hon. Gentleman oppose that policy?

Michael Meacher: I do think that the reduction from 40 to 18 per cent. needs to be looked at very carefully. I know that what has excited the City has been the increase from 10 per cent. to 18 per cent., but as the hon. Gentleman points out, there is another dimension to this issue, and given the costs involved, we ought to consider very carefully whether this is what we intend. The reform was aimed at tackling the increase for those who gain massively from private equity transactions, and I do not think it was aimed at the other side. We ought to look into this matter further.
	The imbalance to which I have just referred needs to change radically. Indeed, it has to if the Government's other laudable aims of reducing social disorder are to be achieved. There is abundant cross-national evidence that, in societies where income differentials between rich and poor are smaller, there is less violence, including substantially lower homicide rates, prison populations are smalleran important issue for this countrycommunity life is stronger, people are more willing to trust each other, health is better, life expectancy is several years longer, there is more social mobility, and educational attainment at schools is higher. That might sound like a wish list. Indeed, I found it difficult to believe until I read several surveys from different countries that illustrated those facts. The truth is that there will be no vision to excite a political response in this country until this fundamental divide, which has now grown so wide, is tackled.
	I do not want to duck the question What would you do about it? which has been rather prevalent in this debate. I believe that, first and foremost, what is needed is much greater transparency. That might involve establishing a pay commission to set down guidelines for a reasonable range of incomes between rich and poor, and applying incentives, of which I am all in favour as long as they are applied consistently right across the range from rich to poor, not just at the top.
	Equally, people should be asked whether they think it right that, in all large and medium-sized organisations, the representatives of all the main grades from the boardroom to the cleaners should, at an annual meeting of the companya private meeting, not a public onehave to justify the pay claims that they are making at the expense of potential pay increases for all other grades. That is my view, but the proposal should be tested more widely. If people believe that it is right, implementing it would inspire a vision of real fairness unmatched by so much of the rhetoric of today.
	The third component for a vision that is sorely needed in Britain today to redress the slide into privatised power and money is a renaissance of the high ideal of public service. Putting some of the largest US health care operations in charge of commissioning the bulk of NHS services, as is now happening, and spreading privately sponsored academies throughout the education systemwith, according to the latest evidence, distinctly mixed and counter-productive resultshas much more to do with market dogma and business lobbying than with improving performance on the ground.
	That applies equallyI say this with real feeling, given the situation in my constituencyto housing, where there is a serious breakdown involving 1.6 million people being on local authority waiting lists. In my constituency, there are 11,000 people on the waiting list yet the total number of council houses after all the sell-offs is only 12,000 or 13,000. There are also 100,000 homeless people in this country. As the Chancellor has said, the Government are trying significantly to increase house building, which I strongly welcome, but the extra 40,000 homes a year is still greatly inadequate. The Government still seem to put too much emphasis on private owner-occupation, when the poorest quarter of the population will never have the necessary wage levels and job security to pay a mortgage.
	Other areas of concern include the privatising of the probation service and the outsourcing of local government functions through the euphemistically named strategic development partnerships. Something else that really distresses me is the swingeing cuts at the BBC. I am all in favour of value for money, but those cuts are being made on such a scale as to put the whole concept of public broadcasting at risk. I think that those are areas where there is a strong case to call a halt and undertake a full-scale review, as I believe my right hon. Friend the Prime Minister seemed to be hinting at and recommending.

John Mann: Before my right hon. Friend goes any further, I want to clarify what he was saying about the purchase of council houses. Is he saying that working-class families in my constituency living in council housing or former Coal Board housing should not have the same right to buy a house that he, I and every other hon. Member has? Is that the policy that he is suggesting the Labour Government should introduce? If so, I suggest that he is in a tiny minority.

Michael Meacher: Of course I believe that people who live in council houses and have the capacity and wish to buy their house should be able to do so. What I also strongly believe, however, is that the proceeds from those sales should not be extracted centrally and should be available to local authorities so that the total stock of housing in the area is not reduced. The problem is that, as in my constituency, the supply has been so drastically reduced that it is impossible to house people who can afford only rented housing. It is not possible to get it from private landlords on anything like the scale required. As I keep having to tell people who come to my constituency surgery in agony and with desperate needs, the houses are not available. I tell them that the Government are trying to deal with the problem but that it will take many years.
	To conclude, I believe that a good case can be made for restoring the ethos of public service in all those areas. Its ethos of accountability, equity, universality, professionalism and altruism would resonate with the British people and would be highly politically popular. I believe that it is a good Queen's Speech, but that there is also a real need for a distinctive vision in Britain today. The three themes that I have tried to outline would, I hope and believe, go a long way to meet that challenge.

John Maples: I have not heard a speech like that in this place since the 1980s, so I am feeling quite nostalgic. The right hon. Member for Oldham, West and Royton (Mr. Meacher) was making the same speech back then, when I first came to this place. The difference is that there were then about 350 Labour MPs making that sort of speech, whereas now he is the lone and authentic voice of those days. I shall not follow him in all the issues that he raised, but I do want to talk about Northern Rock. In fact, I shall talk only about Northern Rock.
	To provide some credentials for this debate, I was a junior Minister at the Treasury when BCCIthe Bank of Credit and Commerce Internationalwas closed and went under and when we had a banking crisis. I am very glad that I did not have to take the decisions. The Chancellor's decisions thenI assume that that is so of decisions taken in the past monthwere some of the most difficult that a Chancellor ever has to make. I had a front-row seat, as I was at all the meetings with the Chancellor and the Bank of Englandand they often took place daily. I think that Normal Lamont would say that those were the most difficult decisions that he ever had to take. At the risk of incurring some displeasure in my good friend the shadow Chancellorperhaps the Financial Secretary will convey this sentimentI expect that the Chancellor's recent decisions were the most difficult that he will ever have to make as Chancellor, unless he has another banking crisis on his hands in the near future, which we all seriously hope he does not.
	There has been a lot of criticism of what various people have done, but it has to be placed in the context of having a bull market for about 15 years, in which there has been easy credit and easy monetary conditions. Those things always end in a credit crunch of one sort or another, and the marginal players go to the wall. They find that they are either not making money and are insolventthat was not the case in this instanceor become illiquid and cannot raise the funds to replace their debt as it rolls over. That always happens and it was to be expected that it would happen. One can never predict exactly where and how the impact will occur, but it is one of the inbuilt weaknesses of our very sophisticated and developed financial markets. It would be interesting to debate whether that is a good or bad thing. Most free-market economists would, I think, say that it was a good thinga self-correcting mechanismbut one of the unfortunate by-products is an occasional banking crisis.
	Let me deal with the Bank of England first. It has been criticised on two counts. One is that it should have injected liquidity into the market earlier; the second is that it should have been much quicker in making a loan to Northern Rock. It would have liked to have been able to do that covertly rather than overtly, and it blamed the regulations. I am not sure that it would have made any difference if it could have done that covertly, as it would have become known very quickly.
	The Governor of the Bank of England gave an eloquent exposition of the moral hazard of injecting liquidity into the market. My understanding of the moral hazard is that bailing people out from their mistakes just encourages them to make more. I think that it was Burke who said that protecting people from the consequences of their folly just populates the world with fools. There is a fine and difficult line to be drawn between where we should bail people out because we are worried about the system going under, and where we should stop bailing them out because we are worried about provoking more of the foolish behaviour that created the problem in the first place. The Bank of England is not open to the kind of blame that has been attributed to it. The Financial Services Authority certainly looked a bit slow

George Mudie: The hon. Gentleman is making a thoughtful and welcome speech. I do not think that it is the Governor of the Bank of England's decisions that are under attack but his inconsistencies, which are not helpful. Does the hon. Gentleman not agree that the market wants above all good judgment and consistency from the Bank of England and its Governor?

John Maples: I am not sure whether good judgment and consistency necessarily go together. I certainly agree that good judgment is needed, but such situations are almost all one-off and ad hoc, and a judgment must be made on the day. The judgment made today might be different from the one made tomorrow. I suspect that judgments would have been different if a really big bank had been in trouble, rather than a small secondary bank of the kind that went under in the 1970s, to which the right hon. Member for Oldham, West and Royton referred.
	Furthermore, the Bank of England has a balance sheet of about 40 billion or 50 billion, and there is no way that it could have made the loan without the Treasury guaranteeing it. Therefore, it ultimately came back to the Chancellor to make the call. I think that he made the right one, although whether he made it at the right moment is a slightly different matter. It is difficult to know whether the Financial Services Authority could have changed the situation by acting earlier. A faulty business model had gone badly wrong, and if that could have been caught in timeI shall come back to what regulators should try to do in the futureit might have made a difference. I do not expect, however, that acting two or three weeks or even months earlier would have helped. The Bank of England Governor, to be fair to him, was making speeches about the dangers in the short-term credit markets some time before this problem occurred.
	As for the Treasury, the Chancellor has been criticised for waiting from 14 to 17 September, over a weekend, to offer his guarantee. I saw this problem at close hand during the BCCI crisis, and I remember one meeting involving the Bank of England, Treasury officials and the Chancellor at which we decided that we would, if we had to, guarantee the liabilities of the major banksthere was a cut-off point in relation to the smaller ones. At the end of that meeting, somebody said, I think that we have just agreed to underwrite all the liabilities of the British banking system. That is a huge decision. The consequences of it going wrong and the banking system unravelling are horrendous. One ends up not only with a horrible recession and probably a depression, but with a hole in the public finances that it will take a long time to repair.
	I therefore have some sympathy for the Chancellor. If he had moved too quickly he would have been criticised, and if he had moved too late he would have been criticised. It was a weekend, and ultimately everything was all rightthe banking system seems reasonably intact. It was a tough call, and we are arguing about whether he should have made it on the Saturday or Sunday rather than the Monday. Anyone who thinks that that is an easy decision has never had to face it. When they do have to face it, they will realise that it is an extremely difficult one.
	One thing that was different previously was that the Bank of England was responsible for bank regulation. Therefore, when the Bank of England Governor and his people sat in a room with the Chancellor and his people, the Bank of England Governor knew everything that there was to know about the banks. The Bank knew exactly when big deposits were maturing and when banks were likely to face liquidity difficulties.
	One of the mistakes that the Prime Minister made in giving the Bank of England independence was in taking away bank regulation and giving it to the FSA. He did it because he thought that the Bank of England would be far too powerful if it had interest rate-setting power as well as responsibility for regulating the bank system. When a lender of last resort must make a judgment about the markets, when to inject liquidity and when to call on the Chancellor to guarantee loans, it is enormously helpful if it has a much deeper understanding of the banking system than it now has without its regulatory responsibilities. One policy change that I will suggest at the end of my remarks is that those two functions should be brought back together.
	We were faced with a tough situation. In retrospect, as with all these things, perhaps it could have been slightly better handled. I have a lot of sympathy, however, for the Chancellor and the Governor of the Bank of England, given the problems that they faced.

Geoffrey Robinson: As I understand it, the hon. Gentleman's proposal is to re-merge the Bank and the FSA, if that is the entirety of it. There were two reasons for not leaving the Bank with its regulatory role when it was granted independence. One reason was that we wanted to make the Monetary Policy Committee a national focus of great importance, as it has become, and that element of the Bank's work was sure to be done much better if it did not have a much wider responsibility including raising funds in the gilt market. The other reason was that the Bank had not been terribly successful in its regulatory role. We felt that an organisation that brought all that together and focused on it would give us a better chance of being certain and comprehensive in the regulatory function. Re-merging the two organisations would be a huge step, and I look forward to hearing what the hon. Gentleman has to say.

John Maples: I do not know whether the hon. Gentleman was referring to BCCI when he said that he did not think that the Bank had been performing its regulatory function very well, but that was also a tough call. The call then was not When do you rescue a bank? but When do you close it? The criticism was that the bank should have had its licence suspended a few months earlier. I was there at the time, and saw the papers. The hon. Gentleman knows what happens in such cases: the Chancellor makes the decisions, but we can go to the meetings and see the papers.
	That was a tough one. Whenever the bank was closed, some people were going to get badly hurt, although I am happy to know that in the event most of the creditors have had most of their money repaid.

Geoffrey Robinson: What about Barings?

John Maples: I do not think that the issues are the same when it comes to smaller banks without retail depositors. I think that the Government could let a small bank go. I do not think it would be appropriate to say where the line was drawn when we considered which banks to save, but certainly the smaller merchant banks would not have been included. They were professional investors who were taking their own risks and were perfectly capable of making the decisions for themselves. It is in relation to retail depositors that the issue arises.
	Yes, I am going to suggest that the bank regulatory functions of the Bank of England should be restored to it. It is responsible for the
	stability of the monetary system.
	It is also the lender of last resortalthough we know that the Government are actually the lender of last resort, because the Bank is not big enough to perform that role by itself. Furthermore, it has a thorough understanding of markets. It operates in the gilt and foreign exchange markets every day, both on its own account and on the Government's.
	The problem with the current system is that there are three parties to it. When one person makes the decisions, there is a problem; when two people make them, there is three times the problem; when three people make them, there is about 10 times the problem, and so on. It is a geometric progression. I believe that it would be better if we could return the system to the two essential players, and I believe that the Bank's knowledge of the banking system through regulating it would enable it to advise the Treasury much more closely and in a much more timely fashion on what sort of market operations should be conducted in the circumstances.

Sally Keeble: This is obviously an important issue, which we also have to examine in the Select Committee. Does the hon. Gentleman not think that if the Bank is the lender of last resort and is also responsible for regulating the same institutions, the decision making will be too close and there will be a conflict of interests between regulator and lender?

John Maples: I do not think there is a conflict of interests, because our interest is in doing what is best in terms of public policy. It may be difficult to draw the line between which institutions to save and which not to save, but I do not think that that is made any more difficult when the regulator is also the lender of last resort. We had that system for a very long time, until 10 years ago.
	As I have said, I understand why the Chancellor did what he did. I am not criticising him for it. I am merely saying that in the light of what has happened we should consider the issue again, and that there is much to be said for bringing the two organisations back together and returning the Bank's regulatory powers.
	What the Chancellor found, what the country found and what we found 15 or 16 years ago was that pretty soon we were guaranteeing a large chunk of the liabilities of the banking system. The guarantee given to Northern Rock has led to potential deposit liabilities of about 40 billion, and so far the loan on the guarantee has amounted to about 35 billion, but when it comes to big clearing banks we find pretty soon that we are guaranteeing much larger sums than that. As an overt and unabashed free marketer I hate to find myself saying this, but if we, the publicfor that is what it amounts toare to give such a guarantee through the Treasury, we must have a little more control over what it is doing.
	People who are reasonably sophisticated financially will know that if they can obtain 5 per cent. from one bank and 6 per cent. from another, they should ask what enables a bank to pay 6 per cent. when most can pay only 5 per cent. What Northern Rock had was a lot of depositors. I was shocked to discover how many of my friends had money in Northern Rock. They had gone there for the extra interest, without asking themselves whether there was an extra risk attached to it.
	When we talk of risk, we should bear it in mind that the public risk is enormous. If we are to guarantee all a bank's liabilitiesat least to retail depositorsthe regulator should look much more closely at what the bank is doing, and second-guess its risk assessment. I believe that a good many banks did not assess the risk correctly. Northern Rock certainly did not price its risk, and I do not think that its strategy took it into account.
	I want to say a bit about moral hazard. We come back to the question: at what point do we bail people out? It is a fancy phrase but what it means is, If I bail you out, am I simply going to encourage you to make the same mistake again? As far as I am concerned, the shareholders in Northern Rock have lost it. If they lose all their money, that is tough but that is the name of the game. They made an investment. I do not have any time for the executives. I agree with the right hon. Member for Oldham, West and Royton on that. I am sure that in short order they will be gone because the institution will be either bought or liquidated.
	We come to the depositors. They fall into two groups: what I call the professionals and the retail depositors. I see no reason to protect the professionals. That is why I asked the Chancellor the question that I asked. In a press notice, the Treasury said:
	In the case of wholesale market funding...the Treasury confirmed that the arrangements
	that is the guarantee
	would cover: existing and renewed wholesale deposits; and existing and renewed wholesale borrowing which is not collateralised.
	That is the 11 billion of medium-term notes, which have maturities of between one and six years; the average, I think, is 3.4 years. I do not understand why the Treasury guaranteed those. I do not believe that it is necessary. What was necessary to stop the run was guaranteeing the retail depositors. The professionals can be left to look after themselves.
	On the deposit protection scheme, it is a mistake to go for 100 per cent. of 35,000. The previous system may have been too small but I think it guaranteed 100 per cent. of the first 2,000 and 90 per cent.I am looking at the hon. Member for Coventry, North-West (Mr. Robinson)of the next 33,000. That seemed to be about right. There was a modest loss for the risk that was taken. One did not lose all one's deposit. However, if we are going to guarantee 100 per cent. of people's deposits, which is where we have been led to in this crisis, we are creating a moral hazard where depositors will feel free to go for the largest interest rate, regardless of the risk, because they know that the Government will bail them out.
	The deposit protection scheme should not go to 100 per cent. Perhaps it should go close to it. It should not go much higher than about 50,000. Sooner or later, a Government are going to have to let a small bank go bust, and take some retail depositors with it, and allow them to rely on the deposit protection scheme. When it happens, that will be a rather nasty, but healthy dose of reality.

Mark Todd: The hon. Gentleman anticipates some of the things that, if I catch your eye, Mr. Deputy Speaker, I will refer to. One other thing has to be done: greater information has to be provided for depositors so that they are aware of what that guarantee is and so that they spread their risks. I was struck by how many people put 100,000 or 200,000 into an institution without understanding at all that there was a risk.

John Maples: The hon. Gentleman makes a good point. I was staggered. Some of the people who were interviewed in that queue had deposited large six figure sums, which they said represented their life savings, in one building society. I agree with him. Perhaps a bit of education needs to be given as to the exact nature of the deposit protection, but of course they now have a Government guarantee, which is better than the deposit protection scheme. The hon. Gentleman is right that people are not aware of the risks that they are taking. Perhaps they should be made more aware.
	Those were my policy suggestions. I want to come to where we are with Northern Rock. I do not want to take up too much time. I am staggered that it is still in business. It has made a catastrophic mistake. One could argue that there were unforeseen circumstances. People get things wrong in business. It is not a criminal offence to make a mistake or for companies to go bust; they do. I find it extraordinary that the Government have allowed Northern Rock to continue in business and are still trying to conduct a sale when it seems clear that no one is interested in buying it without a huge loan from the Bank of England.
	That runs into enormous problems. The first is the state aid legislation, which is going to create a difficulty. Secondly, why should the Government and we taxpayers help to finance to an enormous extent 30 billion or somethinga takeover? We should not. If that is the only way that that organisation can be sold as a going concern, it should be put into receivership. That is what should happen. If, when the bids are due in, there are no satisfactory ones without the Government's guarantee, I hope that the Government will put it into receivership.
	The shareholders will almost certainly take a complete loss at that point, but it will be the consequence of a badly flawed business model and business strategy. At that point, the right hon. Member for Oldham, West and Royton will be pleased to know, the executives will almost certainly go, too. I doubt that the receiver would need them. At least then a couple of things would happen. The organisation would stop taking new business and new deposits; it would stop increasing the problem, which we might have to sort out at some point. Secondly, the receiver could run down the portfolio. The worst case is that it could simply sit back and collect the money on the mortgages, and sooner or later it would pay off the loan. I also suspect that it could collateralise the mortgages; it could sell or refinance the portfolio and pay off the loan much quicker.
	It is extraordinary that we are allowing the bank to continue in business. I hope that that does not last much longer. If by the end of the week we do not have a solutionin terms of a buyerwithout the Government continuing their loan, it should be put into receivership and we should seek to get the public money back as soon as possible. This was a temporary measure to give depositors confidence in the banking system. It was never intended to be a medium or long-term loan to keep this particular institution going. There is a danger that sight of the measure's purpose will be lost. We should let Northern Rock go into receivership and seek to recover the public money as soon as possible. It is important to remember the scale of the sums involved. People bandy around figures such as 25 billion or 30 billion; those are enormous sums of public and taxpayers' money. We simply cannot afford to take the loss. We must seek to recover that money as soon as possible.
	What lessons can be learned from this situation? The Governor and Chancellor had to make difficult judgment calls, but there are a couple of policy prescriptions: we must take regulation back to the Bank of England, and when we give guarantees we must give the minimum guarantee that is necessarywe should protect the retail depositors but not the professionals, and if we revamp the deposit protection scheme we should leave some risk for the depositor so that we do not risk creating moral hazard in the market, as that would come back to haunt us in a bigger way in the future.

Geoffrey Robinson: I am pleased to follow the hon. Member for Stratford-on-Avon (Mr. Maples), who spoke in measured tones about a serious topic, and raised serious issues. I am not as definite in my opinions on them as he is, although I noticed that there was a tentativeness even in his pronouncements. I must say, however, that I think that to move the Financial Services Authority in its entirety back to the Bank, having done what we have previously done, is an unnecessary structural change. There must be liaison, whether within the Bank or between the Bank and another agency. Liaison must take placethere must be co-ordination of policy and the sharing of information. It could be argued that that would be easier to do within one organisation than between two, but I do not know. Whether that is the case is down to the attitude and understanding of the people running the organisations; it is up to them to make things work properly. I do not, therefore, think that such a structural change is worth while. We should consider the Bank's record when it did have responsibility for such matters; we could put the Bank of Credit and Commerce International case to one side, but there were other such situations. I do not know what the hon. Gentleman's contacts were like at the time, but I know that there were great misgivings at the Bank when we split off responsibilities and formed the FSA, combining several agencies to do so. However, whichever course of action we had taken, it would probably not have made much difference in the current case; I think that is the hon. Gentleman's judgment, too.
	Although I would not go down the structural change route, I largely agree with the hon. Gentleman on the moral hazard route. As for the denouement that we can expect to this great crisis, I agree about the sum the Government have already been called on to put in23 billion. The extent of the Government's commitment beggars belief. There is also the guarantee on top of that, and I gather there might be the prospect of further injections of cash in due course if some of the large-scale loans on maturities are not rolled over but are withdrawn. The sum could go much higher than 23 billion. A resolution in some form or other is, therefore, urgent; this situation cannot be allowed to continue to drift.
	There are really only three solutions. One of them is receivership, which I would not rush into. Another is that Northern Rock continues as a going concern, which I am told the loan book is good enough to sustain. If that can be achieved without an undue Government commitmentand certainly without an indefinite commitment in terms of time or sumsit would be my preferred route, as receivership is always a hazardous and uncertain business and is outside anyone's effective control. The third option is that we might be driven into what, in effect, we have now: public ownership. I agree with what the hon. Gentleman says about the shareholders having lostTough, but you've lost, or words to that effectbut that did not work too easily in respect of Railtrack. We were right to take it back into public ownershipit was right for the maintenance of the rail track and the entire integral systembut it did not work out as smoothly as it was thought it would.

John Maples: The Government did not sell the shares in Northern Rock to its shareholders, but they did sell those in Railtrack, and that is the difference.

Geoffrey Robinson: I do not think that there is any difference, because the shares were bought by punters in both cases. Normally, people did well out of privatisations, as the hon. Gentleman knows. We recouped some of that with the windfall tax, based on the underestimation of the sale at the time of flotation. I do not think that there was any difference, because punters who were good for their money bought equity, which is the last in the line of security, and so they should have doneI agree with him on that point. I am anxious, as he is, to see a positive resolution to this situation, but unlike him, I would prefer a sale of an ongoing business if that can be achieved.
	Interesting though that point is, I wanted to contribute to this year's Queen's Speech debate on two other areas. They figured yesterday, have recurred throughout the debates and relate to education and skills. I took the point made a moment ago by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) that this Queen's Speech is much bolder and more significant in certain respects than it is generally given credit for. The measures and intentions on housing are a marked step for change and are probably the most important since the great house building boom of the '50s ground to a halt. Similarly, the effects on working may not be uppermost in all our thoughts, but together with the things that we have done on maternity leave and on other matters, they are fundamentally changing the life-work relationship and balance in the country, and how young married couples and others are able to organise their lives. My right hon. Friend referred to those two important issues.
	It is easy to dismiss two other measures because they will be difficult to achieve successfully. Those relate to our ambition for 18-year-olds. On the one hand, we want youngsters to be in school or in training, while on the other, a legal entitlement has been promised for apprenticeships. I should like to focus our thoughts on apprenticeships for a few minutes, if I may.
	In the annual debate about the GCSE and A-level results, when there is great national excitement and headlines in virtually every tabloid and broadsheet, the sad thing is whether we are devaluing A-level A grades, whether GCSE A grades have any meaning and whether we should not go up further to maintain the excellence of our system. Important though that is in some ways, and important as not losing our sense of direction towards excellence in the education system is, it is wrongly focused, in the sense that that is not the real problem faced in our educational system.
	The real problem is the more than 40 per cent. of people in our schools who do not aspire to university education and who do not have any clear pathway to a career. That is not improving and has not done so; it has been a characteristic of our system. I have only examined the issue since the second world war, when the Education Act 1944 was introduced and the technical schools, secondary moderns and grammar schools were set up. We tried to deal with the problem then. We tried to get the technical schools to take on the vocational courses and give them a profile and importance that reflected the proportion of our youngsters going through school who would not be attracted to a secondary education that went up to GCSEs, A-levels and university. We simply have not succeeded in this area, and if anything, things may have got worse.
	A year or so ago, an extensive labour force survey interviewed 17-year-olds. Some 20 per cent. said that they felt that they had no qualification whatsoever, and that is a telling statistic. We must do something about this. We must focus our minds on it, in the way that we have done on academy schools, to get the standards up. We are worried about the gold standard of the A-level, but let us consider the 40 per cent. of our children who I mentioned, 20 per cent. of whom, when surveyed, said that they had no qualification at all. This is happening in a world where it has become trite to say that we must face the challenge of China and the rest of Asia, and the need for skills. That is the reality that we start with. I ask myself where we have gone wrong and whether there is a deep cultural problem that never gives technical, vocational skills, even at the highest level, the sort of importance and priority that should be attached to them.
	One of the changes that we made, quite unnecessarily, that has contributed to this situation was the disbandment of the careers advisory service in schools. It was changed to Connexions to direct it towards the severely handicapped. One would not want to stop its work in that area, but the careers service was passed to local government two or three years ago, and we have not yet had a report on how it is going. We need a careers service at the earliest possible pointperhaps not by grade two, but certainly by grade fourto inform the youngsters of decent vocational alternatives to A-levels that are just as good, just as important and might even result in better paid jobs in some instances. If that does not happen early in schools, the limbo between those who have a clear path to academic qualifications and the rest will remain in place. The return of the careers service would be a starting point, and that is one of the general points that I think should be included in the education and skills Bill.
	However, I am not sure that two of the other general ideas that have been mentioned will be helpful in promoting vocational training and education, and providing an alternative path of equal standing to the academic education path. The two measures are the diploma and the split of responsibility, with skills being put in with higher education and schools remaining with the Department for Children, Schools and Families.
	On the diploma, we run the risk of reinforcing the divide. I am not sure who will eventually be responsible for the diploma curriculum, but as I understand it, it will not contain any vocational element. In fact, it will be seen as an alternative route for those who cannot get straight on to the GCSE-A level-university path. The academic will again take precedence over the vocational and it will do nothing to help. I even fearalthough I am sure that it is not the intentionthat it will be counter-productive.
	The split in responsibility will also not be helpful, although it is a similar sort of structural change that I was arguing should not be reversed in another context a few moments ago. I cannot see how we can have the train for gain initiativewhich has been successful in bringing youngsters who are in work into apprenticeshipssplit off from the basic apprenticeships and the arrangements for schools, to which I hope more attention and priority will be accorded. I do not know how those two areas of responsibility will overlap or how they can be co-ordinated, but the split is not particularly helpful.
	However, the Secretary of State for Children, Schools and Families has set a bold and achievable objective for a legal entitlement to an apprenticeship for youngsters. He has not said at what stage they will have that entitlement, but I would imagine that it will be at key stage 4, between 16 and 18, if not actually at 16. The great danger is that, while the aim and the vision are terrificand the Queen's Speech has more of both than it has been given credit for so farmaking the vision a reality means making specific, practical and hard changes in the provision of vocational training from the moment children enter secondary school, up to, and especially in, key stage 4. One of the major problems with the present arrangements is that many children want apprenticeships, but cannot get them because the places in industry are not available. That has been a problem for a long time in this countrythe argument has sometimes also been that the children are not fit for apprenticeships, and we need to tackle thatbut it is beginning to show up in economies that have had more success with apprenticeships, such as Germany and Austria.

Sally Keeble: Is my hon. Friend aware of the YWCA's More Than One Rung campaign? It tries to encourage young women and girls to go for better quality apprenticeships and to aspire to some of the non-traditional skills that have higher rates of pay and better long-term earning prospects.

Geoffrey Robinson: I am aware of that campaign, and it is one of the plethora of good programmes that we have. We have given them every encouragement and I should like to see them receive better funding, but it is more a question of national priority and focus.
	There is a deep-seated problem in the culture of the education Department. It has been relatively successful in expanding further education, GCSEs and A-levels and, for all the faults and justifiable criticisms, that has been a success, broadly speaking. Where we have not succeeded is with the 40 per cent. of students for whom vocational training would be most appropriate. Vocational training does not fit the bill for everyone, but I am speaking in general terms and, so long as we leave that culture in the Department, we will not get the step change that we need. We think that it will take five years before we are able to give people legal entitlement to an apprenticeship: unless we start to prepare now, we will not make that a reality, and I want to make a simple proposal about how we might go about that.

Brian Binley: I find the hon. Gentleman's speech immensely credible and welcome. His comments about the deep-seated culture of our educational establishment are absolutely right, and they disturb me enormously. I remind him of the tripartite system of secondary moderns, secondary technicals and secondary grammars. We allowed secondary technicals to wither on the vine, then we forgot the secondary in grammar and the modern in secondary modern. We created an elitist system based on academic thinking whose continued existence leaves me immensely concerned, and the hon. Gentleman raises a vital point that we have to deal with.

Geoffrey Robinson: I am pleased that we can discuss such things in a cross-party manner, because they are national and cultural problems.
	Let me digress for a second. I came up by the grammar school route: I was brought up in Balham, south London, and I knew that I would not go to the secondary modern, nor to technical schoolthat was even worse than the secondary modern. I had to get to grammar school, and a profession was the thing. Vocational education was out, and has largely remained so. It is an intractable cultural problem, reflected throughout industry, that 20 per cent. of young people leave education with no qualifications at all and that more than 40 per cent. do not go to university.
	So what can we do about it? I shall speak specifically about apprenticeships, which could, in my book, address a fair chunk of the 40 per cent. who do not go to university. I am not saying that they would suit all the children coming through but, as has happened in Germany, they could increasingly help us to deal with the problem that I have identified.

Stewart Jackson: I am listening to the hon. Gentleman's remarks with great interest, but feel that he has missed something out. As he will know from his interest in industry and commerce, we will not drive technical and vocational education forward among the 40 per cent. of young people whom he mentioned if local autonomy and power are not given to the sector skills councils.

Geoffrey Robinson: The hon. Gentleman refers to the SSCs, but I get all the acronyms mixed up. We have had many different attempts to solve the skills problem through outside agencies, but they are not working. He will have had read the report on skills by Reith

Stewart Jackson: Leitch.

Geoffrey Robinson: I am sorry, I mean the report by Sandy Leitch. The hon. Gentleman will know that Leitch's criticisms of the learning and skills councils were very severe. Over the next five years, an independent bodya directorate or whatever people want to call itshould be set up and charged with preparing schools and the links between schools and industry.
	A cultural change is needed in industry and in schools to prepare us for a significant increase in the number of apprenticeships. We need capacity in schools, in higher and further education and among part-time providers, as well as a willingness in industry to provide places for youngsters.
	I do not want to set up a quango; the whole House is aware of my views on quangos. There will be no jobs for the boysnothing of that kind. It would be a prescribed, five-year task to get the country's education system ready to make a reality of the legal entitlement to an apprenticeship we shall be offering youngsters. It is a tremendous and bold offer, but it will be lost in a quagmire of councils, initiatives, consultative bodies and all the rest unless we set up a single group, headed by a director.
	The body should be independent of Government, reporting, if necessary, to both the Secretaries of State involved. It would obviously be created by Parliament, no doubt by statute, for a fixed five-year period to prepare the ground for the introduction of the legal entitlement. It would need only a small central staff, with devolution right down to schools and industry, especially small companies. It should have its own tight budget, but no extra money; the budget could be taken from all the other sectors where we spend so muchI forget how many billions a year we spend on skills. The body would report annually to Parliament so that we could monitor its progress.
	If we leave the massive changes we want in the hands of Departments, we shall end up with the situation that resulted when we introduced the new deal. The mindset and culture are such that only by extracting responsibility for the changes and making it the direct charge of an independent body shall we achieve them.

Mark Hendrick: I was lucky enough to attend a state grammar school and then followed a technician apprenticeship before going on to university. When I was going through that process, there were many training boardsI held an engineering industry training board apprenticeshipbut many of them were scrapped by the previous Tory Government. What does my hon. Friend think about bringing back the training boards and giving them the funds to which he refers?

Geoffrey Robinson: I agree. Scrapping training boards and thinking that training would automatically happen when the onus was on the employer was a great mistake. I agree entirely that it contributed to the problems we face now, especially in the interface between industry and schools. I do not want to write a blueprint for the proposed directorate, but it could look into the situation and reinstate training boards if appropriate. It would make decisions about organisational and personnel arrangements down the line.
	The body would need a director with fire in their belly, someone who could drive the decisions through and, where necessary, fight turf wars to get the job done. I am sure that there would be several candidates to lead the group of people who would take on that job if charged by Parliament.
	Many references have been made during the debate to the great Liberal Administration of 1908, Lloyd George's coalition Government and the legislation after the second world war. The one thing that Lloyd George taught Churchillthe thing that made a difference when Lloyd George took over the direction of the war in 1916was that he found the right person to deliver on munitions and on shipbuilding. He put his faith in those individuals; in fact, one of the reasons he did not get back in was because he had such a personal and personalised way of getting things done. He taught Churchill that lesson and we could learn it today; if there is a definable job that needs doing and if it has as much national importance as the delivery of that legal entitlement, the most effective way forward is to charge a person and a group of people with undertaking it.
	I do not have a blueprint and I do not know whether the idea will find any support in Departments, but when we discuss the legislation I hope there may be some support for my proposal.

Several hon. Members: rose

Mr. Deputy Speaker: Order. So far Back-Bench speeches have averaged more than 20 minutes. If we continue on that basis, half the Members who seek to catch my eye will be disappointed, so it follows that if the rate of speaking is halved everyone may be satisfied.

Nigel Waterson: I shall try to live up to your expectations, Mr. Deputy Speaker. It is a great pleasure to have the opportunity to speak in the debate on the Queen's Speech. As always, it is a pleasure to follow the hon. Member for Coventry, North-West (Mr. Robinson). It seems that we grammar school boys have cornered the market in this debate, at least for the moment. He spoke with great knowledge and experience of the skills agenda, which is, as he rightly says, so important for the whole country's future.
	As I intend to speak on pensions, I am sure that the hon. Gentleman will not mind me reminding the House of his niche in recent British political history, for in the safe in his flat at the Grosvenor House hotel was locked the Government's plan in opposition, before the 1997 election, to carry out the raid on pension funds, which has stripped some 100 billion or more from British pension funds. So his place in history is secure, and I think that his memoirs tell us that that was what happened.
	I want to talk, as briefly as I am able to, about the pensions Bill that we are promised in the legislative programme for this Session. The main thrust of that Bill is the introduction of so-called personal accounts, following the Turner agenda of trying to reach the 7 million-plus people in this country who are not making any provision of their own for their retirement. However, the Christmas-tree effect is beginning to rear its head, whereby Ministers and civil servants of any Government are always tempted to hang other things on a Bill, knowing that they have a hard-won slot in the legislative programme. Clearly, another part of that Bill is growing by the day: the deregulation aspects on pensions, to use an umbrella term.
	Perhaps I can just touch on an issue that has attracted some excitement and comment in the media recently: the nature of the political consensus on pensions. I am personally always a bit wary about consensus if it is too cosy and too shallow, because that ends up delivering policies and legislation that do not stand the test of time and might not deliver what they are designed to do. Just to be quite clear, the official Opposition's attitude has always been the sameit has not altered one iotaand it is that consensus is not a blank cheque. We are in this for the right reasons. Clearly, any decision that is made or ducked now will have an effect 40 years or more down the road. That is the nature of pensions policy. We are also in it for more selfish reasons; it might well fall to us to implement some of the changes when in government.
	We agree on the basic direction of travel set out in the Turner report, which suggested trying to encourage people who are not saving for their retirement to start to do so, but we have rightly voiced concerns, not only our own, but those that have been expressed to us by the industry and expert independent commentatorsfor example, the highly regarded Pensions Policy Institute.
	As we limber up for the latest pensions Billthe great thing about my job is that there is always another pensions Bill just around the cornerthere is a danger with pensions legislation that we are fighting the last war, not the next war. I remember serving as a very young, fresh-faced Back Bencher on the Committee that considered the Pensions Act 1995, which was all about Maxwell, of course, but also about dealing with the enormous surpluses that had been building up in pension funds. Of course, we have not had to grapple with that problem too much in the past few years; but again, it might begin to appear in the not-too-distant future.
	I mention our concerns about personal accounts, and a lot of them are interconnected and relate to means-testing. At the moment, nearly half of pensioners retiring are subject to means-tested benefits, and if we carry on as we areeven the Government recognise that we cannot do soby the middle of the century, 75 per cent. or more would be on means-tested benefits. That causes the deep problem of whether it is worth people's while to save for their retirement and whether they will be any better off, because of the widespread means-testing in the benefits system. That issue relates to advice. We back, and always have doneeven before the Government didthe notion of auto-enrolment, which means that people in workplaces should automatically be enrolled into personal accounts. That has enormous advantagesnot least in keeping down the costs of the scheme, an important issue.
	However, auto-enrolment also brings problems, because it will not benefit a significant minority of people who would be much better off opting out of personal accounts. Again, the Pensions Policy Institute has done excellent work on the at-risk groups in that regard. Much more thinking needs to be done on the advice that such people receive; Otto Thoresen is continuing his review into the nature of generic advice, that great oxymoron. Those people need advice about the extent to which they may be no better off because of means-testing and thought needs to be given to what can be done to reduce levels of means-testing in the system in that respect. There is a toxic mix of the most complicated pensions and benefits systems in the world.
	Another big issue for us, on which I shall touch again in a moment, is that of levelling downthe erosion of more generous existing pension provision by the introduction of personal accounts. However, I come back to the issue of less well-paid people, who may have interrupted work patterns and may be at risk by being auto-enrolled into personal accounts. Various policy options are being considered by bodies such as the PPI. There is the method of giving such people advice so that they have the information at their fingertips to make the right decision on whether to opt in or out. Suggestions have been floated that whole groupsperhaps low earners or older peopleshould not be auto-enrolled, but swept up in an automatic non-enrolment because they would probably not get high returns, if any, from the system. There has been much debate about increasing levels for trivial commutation and the capital disregard, but the cost of that is not insignificant: 500 million, rising perhaps to 2 billion a year.
	In the past couple of days, another proposal has been floated, again by the PPI, which is doing excellent work for BCE, which runs an excellent niche pensions scheme within the building industry. The proposal is to have a pension income disregard. Today may not be the day, but if Ministers have had the chance to consider that proposal, it would be useful if they gave some idea of their likely reaction to it. The basic proposal is that the first 12 a week of private pension income should be disregarded in any calculation of means-tested benefit. John Jory, the deputy chief executive of BCE, is spot-on when he says:
	Someone who saves for their retirement must be demonstrably better off than someone who doesn't.
	The Government's current proposals create a real danger for many people in that respect. We are talking about people with low earnings, those with broken working histories, older people with low earnings and no prior savings, the self-employed and, perhaps above all, those who are likely to be renting accommodation in retirement because of the effects of housing benefit. I have not had the chance to read the whole paper, but it seems that the cost is likely to be somewhere around 600 million on top of the existing means-tested benefits budget. The proposal would certainly reward deeper study, not only by Opposition parties but by Ministers.
	I said that I would touch briefly on deregulationa wide term to cover a series of legislative options. Personal accounts, of course, will be the new kid on the block. However, without deterring those who should be auto-enrolled, we have to get it across to people that the level of contributions inherent in personal accounts will not deliver a particularly comfortable retirement. That is where the danger of levelling down arises: employers may well think twice about doubling or nearly doubling overnight their participation rates in an existing scheme. It may make economic sense to shut the schemeif it is not closed already, of courseand point employees in the direction of the Government-approved personal accounts scheme.
	However, we must never forget that in this country the gold standard in terms of delivering secure retirement incomes is still defined benefit schemes. We should be spending a bit more time not only on the question of how we deliver personal accounts and all the techie stuff about how they will work, but of what we can do, as a matter of public policy, to encourage sponsoring employers with existing DB schemes to keep them open, not only for existing members but even for new members. We are almost in the last chance saloon as regards DB schemes. Enormous numbers have closed in recent yearscertainly since 1997. A mass of existing schemes that are still open could well move to closure unless something is done to stop the trend. In due course, the only place where we might find DB schemes is in a museum.
	A lot of work has been done by the Association of Consulting Actuaries and the Association of Pension Lawyers on risk sharingthat is, trying to change the balance between who bears the risk. All too often, employees have been moved towards defined contribution schemes where all the risk, in effect, falls on them. The Government seem to have a slight blind spot over risk sharing, which we should be considering much more seriously. Changes in the law may be requireda bit of regulation may even be needed to make it work. Also important is the work done by Fidelity in its design for what it calls DB Lite.
	On the question of removing mandatory indexation for future accruals, our position is broadly to support the Government against an unholy alliance of the Trades Union Congress and some of the tabloid newspapers. We are at a desperate point in the history of pensions where we need to take radical actionmore radical than some of the suggestions by Chris Lewin and Ed Sweeney in the deregulatory review of private pensions and more radical than the Government seem intent on being in the light of those recommendations.
	Another important issue is that of normal pension age. There is no earthly use in encouraging people to work for longer because they will remain fitter for longer, or increasing the state pension age, given that some pension schemes have mechanisms that stop people working longer and not taking their pensions.
	There is important work to be done on principles-based legislation, which we broadly support. People in the pensions industry are generally pretty grown-up and responsible, and ideally placed for that approach to legislation.
	It is no surprise that the issue of surpluses is beginning to rear up again, and that must be addressed. I am told that the Government's proposals for the Bill will include simplification of the rules on pension sharing and divorce.
	I know that Ministers have a lot on their plate at the moment, but I urge them not to be too obsessed with the mechanics or architecture of introducing personal accounts, important though it is to get that right. We will do what we can, in a constructive and consensual way, to ensure that we end up with the right design, but there are other issues involved. There is a great risk that the introduction of personal accounts could undermine existing provision. In parallel with that, a responsible Government and Opposition must do what they can to encourage DB schemes to continue, with the genuine involvement of a lot of workers and future workers, and there is radical work to be done on how we achieve that. The Bill is an opportunity not only to bring in the personal accounts system but to take some radical, bold steps to try to ensure that the DB schemes that are still open to members can remain so for many years to come.

Barbara Keeley: I wish to support the Loyal Address and speak against the amendment because I believe that we have a programme that can enable great advances to be made in skills development.
	The Chancellor of the Exchequer referred earlier to the need for greater skills development for the economy, and he said that while we now have 9 million highly skilled jobs, we will have 14 million by 2020. He also said that while we now have 3 million to 4 million unskilled jobs in the economy, that figure will shrink to only 600,000 such jobs. Clearly, those figures have important implications for policy on employment and skills development.
	The Government have made a great deal of progress in the past 10 years in raising achievement and skills development by developing learning opportunities and creating many more apprenticeships. Indeed, while there were only 75,000 apprenticeships in 1997, there are more than 250,000 today. Completion rates of apprenticeships have increased to 63 per cent. from 24 per cent. five years ago. Success rates in further education colleges have increased to 77 per cent. from 59 per cent. five years ago. As the Leitch review told us, apprenticeships are crucial if the UK is to become a world leader in skills.
	On that basis, it is right that the Government have adopted targets to increase the number of apprenticeships to 500,000, and to increase the completion rate for apprenticeships to 75 per cent. The principle of making work work is the right one, but it must work for young women as well as it does for young men. We need to take action to break down segregation based on gender, which seems to be rife in apprenticeships. Such segregation leads to a gender pay gap that begins at the age of 16 for young women.
	I am indebted to the YWCA and its campaign More Than One Rung for drawing my attention to the research and findings in the area of skills, apprenticeships, and low pay for young women. I would also like to pay tribute to my hon. Friend the Member for Northampton, North (Ms Keeble), who has supported the YWCA campaign and highlighted it for many months now.
	Years ago, apprenticeships were mainly in traditionally male-dominated trades such as building, plumbing and engineering. However, today, apprenticeships span 90 sectors of the economy, including hospitality, customer services, retail, hairdressing and health and social care, as well as the traditional areas of engineering, construction and the automotive industry. They are central to our vocational education and training system, which is why I believe we should not tolerate it if occupational segregation means that apprenticeships create and sustain patterns of pay and opportunity that discriminate against young women.
	While the number of young men and women on apprenticeships is more or less equal, the distribution across the sectors is not. Young men are much more likely to be doing advanced apprenticeships that result in them gaining higher level qualifications. Females comprise 92 per cent. and 97 per cent. of apprenticeships respectively in sectors such as hairdressing and early years care and education, while engineering, construction and automotive apprenticeships are only 3 per cent., 1 per cent. and 1 per cent. female respectively. Perhaps the best example is the electro-technical sector; it is the highest paid sector of apprenticeships, but young women make up less than 1 per cent. of its apprentices. Such segregation leads to a situation where the average female apprentice earns 26 per cent. less than a male apprentice, which translates to a 40 a week difference in pay.
	The placement of young people in specific sectors is important because 62 per cent. of apprentices continue to work for the same employer after their apprenticeship and a further 19 per cent. stay within the same sector but with a different employer. A survey of apprenticeship pay completed in 2005 showed that the lowest paid trainees were in hairdressing92 per cent. of these apprentices are femalewhere the average take home pay was only 90 a week. As I mentioned earlier, the highest paid apprenticeships were in the electro-technical sector where take-home pay was 183 a week. However, even in sectors with a more even split of gender, young women can still be paid 15 per cent. less than young men.
	A further problem is that young women apprentices are less likely to be paid for overtime. According to a survey, only 52 per cent. of young women were paid for overtime compared with 83 per cent. of male apprentices. Additionally, the type of apprenticeships that young women take are less likely to lead to a higher level national vocational qualification. As the higher level NVQ is necessary to access higher education and professional programmes, which will be really needed in future, a significant difference in training is received by young men and young women.
	Taken together, the differentials in pay and the lower level of training are putting young women in a weaker economic position right at the start of their adult lives. They also have fewer opportunities to progress to jobs and careers with improved pay and prospects.
	In the sectors dominated by female apprenticeships, apprentices are more likely not to have employed status but to be on a programme-led apprenticeship. They can receive the education maintenance allowance, and that has clearly made a difference. Their parents can also claim benefits for them. However, in principle, such benefits should be paid to the apprentices, and the YWCA campaign recommends that. If payments are low during an apprenticeship, it is more tempting for the young woman to sign on as unemployed instead. We are all worried about the young people who are not in education, employment or training.
	The Government have carried out work on reducing the gender pay gap with a great deal of support from Labour Members. Indeed, in recent weeks, Conservative Members have expressed new concerns about the gender pay gap and it is gratifying to Labour Members that, after many decades, decreasing the gender pay gap has all-party support. However, the size of the gender pay gap for apprentices is so worrying that it clearly needs to be tackled urgently.
	Health and social care, and early years education and care are essential work in our communities and important sectors of work for the Government. However, in the context of apprenticeships, they are sectors in which the work is not properly valued. As I said earlier, the Government plan to increase the number of young people who complete an apprenticeship. That will be more difficult for young women on the low-paid apprenticeships that I described.
	Surveys by the National Foundation for Education Research showed that dissatisfaction with pay is highest among trainees, with a quarter dropping out of training, citing not earning enough money as their main reason for giving up. We must ensure that young women have better information on career choices and pay. The Equal Opportunities Commission found that two thirds of young women were not aware of differences in pay rates. It is unbelievable that people make career and job choices without understanding the pay rates that they could get in other jobs or in their current job, but it happens. Almost seven out of 10 young women would have considered a different job if they knew about different pay rates.
	The YWCA would like a duty to be placed on local authorities and other key local players such as Jobcentre Plus, Connexions and learning and skills councils to assess and fulfil the skills training and apprenticeship needs of young women. Apprenticeship employers have a key role to play. The EOC found that only half such employers had links to secondary schools and that far too little work experience was being offered to schools. That must change to give young women access to better paid apprenticeships, which mean better paid jobs when they complete them.
	The EOC also found that many young women were prepared to break out of traditional roles. Indeed, eight out of 10 young women said that they would try non-traditional work. In my early career, I worked in the IT industry with IBM, which, at that time, was a non-traditional career for a woman. Initiatives such as running computer clubs for girls in school can help them get interested in different careers. Some learning and skills councils work with employers, asking them to offer interviews to atypical applicants. It is important that careers and Connexions services ensure that their advice material to young people has no gender bias.
	Children's trusts have a role to play to ensure that disadvantaged young women in particular get the chance to meet and get support from inspirational womenfor example, women who are achieving in their careers, women in business and women in engineeringin their community. That could help increase their confidence and broaden their horizons. Teachers also need help and support so that they can play a role in discussing gender issues that affect work and career choices.
	The debate about women and work needs to focus not only on the glass ceilings that prevent high flying women from progressing. It should also focus on people at or near the bottom rung of employment and ensure that young women can climb the ladder to more skilled and better paid work.
	The YWCA campaign has been great in showing us that the problems of young women being trapped in low skilled jobs with no training or prospects for progression start with apprenticeships, career choices and the choice of subjects in schools, made when the young women have too little information. It is time to ensure that young women can break out of that and get proper access to skilled and better paid work.
	During this debate on the Queen's Speech, the Secretary of State for Children, Schools and Families pledged that the education and skills Bill would deliver world class skills for all. Clearly, our economy needs a more skilled work force and I hope that, in this Session, Ministers and hon. Members can work on that and make the legislative and other changes that will help with the problems that I have outlined.

Brian Binley: It is a pleasure to follow the hon. Member for Worsley (Barbara Keeley). I found her remarks very meaningful and her speech well constructed and I pay tribute to her for that. I should like to comment on the work done by the YWCA and, if I might be presumptuous, say that it was good of her to congratulate my colleague, the hon. Member for Northampton, North (Ms Keeble), who works hard in support of the cause that the hon. Member for Worsley mentioned and is particularly committed to the YWCA's More Than One Rung project.
	My role today is to speak on behalf of the millions of people who run small businesses in this country. That is a pretty big job and I will do my best by them. They are vital to the country's future well-being, but they face some sizeable problems. I know from my own experience that they work many hours. Indeed, if they counted the cost of those hours in terms of an hourly rate, they would perhaps decide not to proceed, but they do. They are people who are struggling to maintain a healthy cash flow in the face of a sizeable credit squeeze by the banks. We need to recognise that, too. Those who run small businesses have some uncertainties about their future. Finally, they feel undervalued.
	Starting and developing one's own business is a tough place to be. I know that because I have been there on two occasions, both with successful companies, I am delighted to say. It takes a great step of courage to do the job. Most of us start out without really knowing what we are going to face and we deal with problems as they come along. We have often not planned the process anywhere near as well as many people think we have. Starting a business is a difficult challenge and I pay tribute to all those people who embark upon that journey.
	I also want to speak on behalf of the many thousands of would-be entrepreneurs who want to start up a business. They are finding it difficult to cut through the confusing messages that they are receiving from the Government. For instance, there are about 3,000 start-up schemes run by the Government to help would-be entrepreneurs. The Government are trying to rationalise that process and I welcome that rationalisation, but it is a confusing world to find one's way through. I hope that the Government can hasten that rationalisation, because some difficult and complicated messages are being sent out. Finally, because of the credit squeeze to which I have referred, would-be entrepreneurs are finding it much harder to get start-up money from banks. That needs to be recognised, too. Some would-be entrepreneurs are bewildered and frustratedI know that, too, because I meet them every week.
	I want the Government to consider the messages that they are sending that sector of our wealth-producing world. I want to challenge them on some of the actions that they have taken in sending out those messages, specifically with regard to tax. I do not need to tell the Minister of the import of small and medium-sized enterprises. She will know that UK plc has been shedding about 1.5 million jobs over a 10-year period, at the same time as SMEs have been creating 2 million jobs. That underlines their importance. What is less well known is that SMEs are also the dynamo of creativity for British business. Much of our innovation and many of our new practices and ideas are emerging from the sector and feeding through into the well-being of our nation. My final point about SMEs concerns their role in the supply chain for big companies and plcs. Airbus employs 13,000 people directly, but 135,000 people are employed in some 400 companies in its supply chain. We therefore appreciate the import of the sector, but we need to talk that up more.
	I do not need to tell the Minister about the massive challenges facing the sector, with the prospect of India and China being responsible for 60 per cent. of world trade by 2050, or about the ever-growing regulatory burdens that it faces. The British Chamber of Commerce's burdens barometer shows an increase of 55.6 billion in the cost of those burdens between 1998 and 2007. That is a lot of extra costs being placed on the SMEs in our small business sector, and we need to recognise that that makes it more difficult to compete in an ever more competitive world.

Charles Walker: Does my hon. Friend agree that, given this country's historical links with India, the emergence of India as a global economy offers our SMEs huge opportunities to increase their presence in the European and global marketplaces?

Brian Binley: I am delighted that my hon. Friend has made that point. I have the privilege to be a member of what used to be called the Trade and Industry Committee. It is now the Business, Enterprise and Regulatory Reform Committee, affectionately known as DBERR. The Committee has looked into the opportunities in India, and argued strongly for British business to get out there and share them, because India has a very pro-British culture that welcomes British involvement. I know that Lord Bilimoria echoes those thoughts and has also made those points to the Government. I am delighted to support them.
	I shall return to the difficulties that SMEs face. I have already mentioned the growing regulatory burdens. They also face a shortage of skills, which has been talked about at length today. I pay tribute to the hon. Member for Coventry, North-West (Mr. Robinson), who made a thoughtful contribution to the debate, and one which was very meaningful in the present situation. We should be immensely concerned about our skills base. The fact that only 14 per cent. of our work force have qualifications at national vocational qualification level 3 or above, while the figure in Germany is 46 per cent., illustrates the difficulties that we face in regard to our skills base. This is a matter of vital importance.
	Most of all, the sector is concerned about the burden of increased taxation. The Government talk about being business-friendly, but many of their actions in relation to taxation over the past year have given business a different message. This is an issue with which they need to come to terms. SMEs are genuinely wondering whether a Government who claim to be business-friendly are really recognising their problems and responding to them. I understand some of the Government's arguments about some of the measures that they have taken, but I would still like to point out to them in the firmest of terms that the small business sector is vital to us. They have a real problem with the sector now, and they need to communicate with it and to listen to it in a more meaningful manner.

Julia Goldsworthy: Does the hon. Gentleman agree that it is often the businesses at the small end of the small and medium-sized enterprise sector that are at the sharp end of some of the Government's decisions? Micro-businesses with only a handful of employees feel the impact of red tape the most.

Brian Binley: I thank the hon. Lady for that contribution; she is absolutely right. It is reckoned that the relative burden of regulation and additional taxation on a micro-business can be 30 times as great as on our large plcs, which have the necessary income to pay for the expertise to deal with the problems created by the increased burdens and increased taxation. Smaller businesses do not have that income. I accept the hon. Lady's point totally, and I am pleased that it has been included in this contribution.
	The increase in the rate of corporate tax from 19 to 22 per cent. will be a massive blow to smaller businesses that want to grow. They often grow from retained profit, which is usually their only means of financing growth, especially at a time like this, when banks are being more particular about the money that they lend to the sector. Yet here we are adding a 16 per cent. increase in corporate taxes for those small businesses. I could go on, but I will not, as I want to keep this brief, as you requested, Mr. Deputy Speaker. I recognise that I am beginning to eat into my time, but let me make the point that small businesses tell meday in, day outthat the burden of corporation tax will be great and cumulative. It is a great problem.
	I could provide example after example when it comes to capital gains tax. It will hit small businesses in two ways. The first is that they are being hit hard and their pensions are being decreased by the very actions that we are told the Government will take. Secondly, entrepreneurs build businesses with an exit strategy in mind. They are the good people who create businesses and then hand them on to people who will go on to manage and grow them. Different skills are required, yet those people will face even greater difficulty.
	I would love to go on for hours, Mr. Deputy Speaker, but you would not want me to [Interruption.] No, you would not allow me in any case! I appeal to the Government to recognise that small businesses are under massive pressure, partly because of the impact of proposed Government actions on taxation. Even at this very late moment, I urge the Government to reconsider and provide more support and confidence to a sector that our children and grandchildren as well as ourselves will rely on to meet the global challenge that we are told they will face in 10, 20 and 30 years' time.

Mark Todd: Given the subject of the debate, I should refer briefly to the health of the South Derbyshire economy. It is the area that I represent and we now have a claimant unemployment rate of only just over 1 per cent. We have a robust manufacturing base. A third of the South Derbyshire work force is employed in manufacturing, which is double the national average. The region has major companies such as Toyota, but also has many skilled Rolls-Royce and other workers employed in some of the key manufacturing businesses of our economy.
	South Derbyshire is arguably the manufacturing centre of the UK and it is also becoming an increasingly affluent place to live. It is attracting businesses, which widens the range of work available to my constituents. Much of it lies to the credit of the work force, particularly their flexibility and their ability to absorb change, but many Government measures have aided these processes, so the Government deserve some credit for that.
	I want to focus on more global issues. I am concerned that after a long period of benign circumstances in the global economy, we may face some difficulties in future. I have watched as current account imbalances in the USA have been matched by inward investment with growing doubts as to how long it can possibly be sustained. The potential consequences of those with savings and investments choosing not to place their wealth in the USA could be serious. There is little that we can do about it, but it is a real concern because of the implications for the global economy and then for our own economy, which, in being a centre for trading with the US and many other parts of the world, is a critical part of it.
	The hon. Member for Stratford-on-Avon (Mr. Maples) touched on another important issue when he made some interesting remarks about Northern Rock. I refer to the process of financial integration in our world. First, it is important to say how positive much of that has been. We have tended to be rather complacent and accepting about what has been happening, without looking at the extraordinarily innovatory skills displayed over the past 10 to 15 years, and the ability to handle a transformation in the trading of increasingly complex products for dispersing loans around the world. One of the main benefits of that is the dispersal of risk over a much wider scale than previously.
	However, the liquidity glut that we have had for some years, which terminated rather dramatically this summer, led to complacency in the pricing of risk, as was mentioned earlier in the context of one UK bank. We have also seen a race towards the lower and lower pricing of that risk in the seeking of new business. I have been concerned about that, and the regulatory authorities and the Bank have talked about some of those risks for some time, well before the Northern Rock hit us firmly in the face with a specific example of the possible consequences. There is in part an unwillingness on the part of those who trade in such products to fully appreciate that the risk is dispersed across the life of the product. They seem to think that just because conditions seem excellent now for trading the particular item, those conditions will remain in perpetuity, or certainly for the lifetime of the loan. We can learn some salutary lessons from the experiences of the past few months in relation to understanding how risk must be priced and the consequences when it goes wrong.
	Clearly, a broader international understanding of risk management is required among regulatory bodies. Let me illustrate the scale of innovation that we have seen. In 1992, the worldwide volume of derivatives outstanding was valued at $12.1 trillion. In 15 years, that sum has grown thirtyfold. We have therefore seen a startling growth in the migration of loans around the world, and we ought to give credit for the fact that that has been achieved through incredible developments in our financial services markets and the skills of those who trade in them, and with relatively few disadvantageous consequences. We should try to keep in proportion the issues that we have faced recentlyI will return to that issue in my final remarks. We have seen what happens when things go wrong in our own economy and banking system, but it is important not to overreact and ignore the context of a much longer period of stability and successful innovation in products.
	The tool sets available for assessing risk in our financial institutions have been tested recently in the UK and, I have to say, have been found wanting. I do not want to prejudge the deliberations of the Select Committee on which I serve, but I would be surprised if there were not criticisms of the way in which the Financial Services Authority carried out its function of examining the affairs of Northern Rock.
	Beyond the UK, there is also an important context. The internationally agreed frameworks for capital adequacy, such as Basel II, give inappropriate signals of the security of some financial institutions, when exposure to liquidity crises is not tested in the process at all. Northern Rock had passed the Basel II test and was about to distribute proceeds to shareholders because it thought that it did not need as much capital. Then the crisis hit. Of course, there was not a proper examination of its exposure to liquidity risk, so it did not seem to have built that into its thinking at all.
	At the UK level, the Financial Services Authority has already accepted some degree of fault in the matter. I am sure that in future we will assess test scenarios for the security of our financial systems beyond those that have been used so far.
	I want to say a little about the design of savers' guarantees, to which the hon. Member for Stratford-on-Avon also referred. I agree with him that it is important for us to design a savers' guarantee that correctly protects small savers who are innocents in this regard. If we protected every saving placed with a bank the potential liabilities to British taxpayers would be massive, andthis is the moral hazard argument which we have already heardwe would encourage mistaken behaviour in the banking community. However, the guarantee that we provide must be backed by a clear communication of its limit. I support the view that all depositors should receive a statement in bold type of the exact level of the guarantee that they are receiving when placing a saving in the hands of a particular financial institution. Such a statement should be expressed in not threatening but factual terms, so that no one can claim ignorance. As I said earlier in an intervention, I was startled at the number of people who had been putting very large sums in one institutionall their savingswithout any appreciation of the risk that they continued to bear, small though it was.
	Let me end by repeating something that I said earlier: we should not overreact to the circumstances of the last few months. The hon. Member for Stratford-on-Avon gave a very reasonable analysis of what had happened, and of the difficult decisions that had to be made. He could have gone on to explain, as I have tried to do, that there has been a generally successful regime in this country for quite some time under both parties, with relatively few failures and relatively small consequences when such failures have occurred, unpleasant though they have been for those directly involved in them.
	It would be wrong for us to respond in a typically British way by ladling vast quantities of regulatory intervention into the system in the belief that it will prevent any risk from ever arising. That is a typical response to a crisis: we immediately command others to stop the risk occurring again. I regularly argue with constituents who say to me, We must make sure that that never happens again. I have to tell them, We can attempt thatwe can make it less likelybut we can never say never. Ladling disproportionate intervention into the system would stifle the innovation to which I have referred, whose effects have been generally positive. It would also burden our financial sector substantially and, through that, burden the United Kingdom economy and make it less competitive.
	We must react in proportion to what we have seen. It is difficult to avoid the instinctive feeling, which I have seen in all Governments, that they can take dramatic interventionist steps to prevent a risk from ever arising; but what is required is a better understanding of the risks that we face rather than vain attempts to eliminate them altogether.

Stewart Jackson: It is a pleasure to follow the reasoned tones of the hon. Member for South Derbyshire (Mr. Todd). I am sure that Members on both sides of the House feel that he will be missed when he retires at the next election. It is also a pleasure to contribute to the debates on the Gracious Speech.
	I shall confine my remarks essentially to two issues. The first, on which I shall speak very briefly, is the vexed question of party funding; the second, which is particularly pertinent to today's debate, is welfare reform and the Government's stewardship of the welfare state, including pensions and benefits. I draw the House's attention to my entry in the Register of Members' Interests.
	On the issue of party funding, I would caution the Governmentas informally as possible, and in a friendly wayagainst making the mistake of pursuing unilaterally the option of using vital legislative time to force through a Bill to gerrymander Opposition parties out of a number of key marginal seats without also seeking to include trade union funding and donations. The British public are aware of the fact that they have stumped up 10 million for the union modernisation fund over the past seven years, and that, in 2006 alone, 9 million was given by the trade unions to the Labour party.

Caroline Flint: The hon. Gentleman said that he would like to declare something in the Register of Members' Interests. Could he detail what that is, because he leaves us rather perplexed?

Stewart Jackson: I am sure that the Minister will be happy to read my entry when she leaves the Chamber. I have obviously hit a raw spot there.
	The British public will see that Bill as underhand, unfair and completely self-serving. I caution the Government that they should not proceed with it.
	I want to talk about welfare. The hon. Member for South Derbyshire made a reasonable point about the benign economic circumstances that have existed over the past 15 years in this country. I accept that, in every quarter since the middle of 1992, there has been reasonable economic growth, but I believe that the Government's reputation rests on three quite precarious pillars. One is financial services. Financial services are an immensely important part of the success of this country as a world economic power, and the United States investment bank crisis and the credit crunch will inevitably have an impact on this side of the Atlantic. The Government should beI am sure that they areaware of that. The second issue is the unprecedented level

Kitty Ussher: The hon. Gentleman advised that we look at his entry in the Register of Members' Interests. I wonder whether he could tell us what the United and Cecil club is.

Stewart Jackson: I am happy toit is a dining club and it made a contribution to my fighting fund before I was a Member of Parliament. The Minister should perhaps research her attack points a little more comprehensively before she intervenes.

Madam Deputy Speaker: Order. I think that the hon. Gentleman is about to move on, but I suggest that we move on and debate the amendment on the Order Paper.

Stewart Jackson: Thank you, Madam Deputy Speaker. I am sure that those on the Treasury Bench will have noted your comments.
	The second issue is about public expenditure. We have seen unprecedented public expenditureroughly 5 per cent. above the rate of inflationover the past 10 years. That will significantly reduce and that will have a macro-economic impact. The third issue is the housing market, which in many parts of the country is such that new build is not sufficient to keep up with demand. Younger people and families cannot get on the housing waiting list. In my constituency, we have over 6,000 people on the housing waiting list. Any reduction in house prices will have an impact on the wider economy.
	I would like you to cast your mind back, Madam Deputy Speaker, to 2 May 1997. How many Labour Members of Parliament would have imagined that their own Government would beit is scarcely credibleso inefficient, incompetent and wasteful that we now have 5.4 million economically inactive people in our country? The Government do not even know how many jobs they have created. They cannot even verify their own spin. They cannot even say how many foreign workers have entered our country and are in the work force. They have probably understated the number by at least the 300,000 that was conceded two weeks ago.
	Three million people are not in work of any kind. We are constantly told about the Government's success in the economy, but those people are not sharing in that economic success and that growth. Under the current Government, we have embedded a culture of welfare dependency. Millions of people are excluded from sharing in success. They are in cultural and economic limbo.

Barbara Keeley: I do not know for how long the hon. Gentleman has been a Conservative, but I remember when there was a Conservative Government. I was in local government at the time, and there were millions of unemployedthere were thousands of unemployed people in any constituency. If the hon. Gentleman wants to talk about welfare dependency, he ought to think back to the damage wreaked on this country by Thatcher. Under the current Government, in my Worsley constituency we have 1,000 more people in employment. That is a fact. One thousand more families have benefited and are not welfare-dependent.

Stewart Jackson: Under the hon. Lady's Government, the gap between the poorest 10 per cent. and the richest 10 per cent. has widened. That is a badge of shame for her Government, given the enormous amounts of public money they have wasted and frittered away. It does not wash for the hon. Lady to claim some sort of moral superiority.

Stephen Crabb: We could spend all day arguing about the track records of different Governments, but the truth is that worklessness is still a serious problem in this country. The only thing that has let the Government off the hook in terms of not providing enough investment for skills training and not tackling the growing number of young people not in education, employment or training is the fact that the country has been swamped with a lot of foreign workers, many of whom are highly motivated and have a strong work ethic.

Stewart Jackson: I agree. The Prime Minister's patently absurdand, frankly, disingenuouscomments about British jobs for British workers are risible and stand up to no reasonable scrutiny.

Caroline Flint: rose

Stewart Jackson: I will not give way to the Minister because I must make some progressif she will allow me.
	What is the situation? There is a hinterland of crime, alcohol and drug abuse, poor educational attainment, antisocial behaviour and sexual promiscuity. We have the highest rate of teenage pregnancies in western Europe. We are currently spending within the remit of social protection 100 billion per annum4,000 per household. That is happening under a Labour Government. We are constantly told how many more people are in work, but rarely is mention made of how many people are not in work and thereby not contributing to the economy and generating tax income for our public services.
	I wish to draw Members' attention to the increasing complexity of the welfare state, even in the past 10 years. There are now 51 separate benefit entitlements, compared with 27 in 1979. That points to a pertinent fact: less than 20 per cent. of non-pension welfare expenditure is in any way conditional on claimants seeking employment3 per cent. in respect of jobseeker's allowance and new deal, and less than 16 per cent. in respect of tax credit expenditure. The figures are startling, and Members would be wise to take note of them. The number of people remaining on benefit for more than five years has risen by 600,000 since 1999 to 2.4 million, and 1.25 million young people are not in work or full-time education. Almost 50 per cent. of young jobseekers who leave the new deal for young people are back on benefits within 12 months, and 2.7 million people are on incapacity benefitsignificantly higher than in 1979. We are told that we have a healthier country, but what we are talking about is nothing short of disguised unemployment by this Government.
	Most academics would accept that at least half the 5.4 million welfare-dependants in this country could work if they chose to do so, but this Government have not sufficiently developed programmes and policies to enable that to happen. If people can work, why do they not choose to work? It is not because of the lack of jobs. In my constituency, the eastern region, the south-east of England and London in particular, I see that jobs are available for people to take. The sad fact is that after 10 years of a Labour Government, not taking work is a rational option for many people. Ministers know that full well.
	Recently, the permanent secretary at the Department for Work and Pensions told the Public Accounts Committee that benefits were non-sanctionable. That means that there are no consequences for recipients who refuse to take work. What sort of benefits system is that to have in the fourth or fifth largest economy in the world? The failure to tackle welfare dependency is a national scandal, and in respect of benefit fraud it is unfair and unjust to those such as children in poverty who are truly in need of assistance and state benefits. The Chancellor of the Exchequer cried crocodile tears about children in poverty, but according to the DWP, child poverty rose last year by 100,000before housing costto 2.8 million individuals, or 22 per cent. of children. If housing cost is taken into account, it rose by 200,000 to 3.8 million, or 30 per cent. of children.

Si�n Simon: May I check whether the hon. Gentleman was serious about the crocodile tears? By crocodile tears, I assume that he means that the Chancellor of the Exchequer and the Labour Government are pretending to be concerned about child poverty for cynical reasons when they are not concerned about it at all. I understand that child poverty was not on the agenda for 20 years until a Labour Government came to power in this country, put it in the middle of the agenda and spent a decade doing something about it. If the hon. Gentleman thinks that that is crocodile tears, perhaps he should have learned a little bit more about why.

Stewart Jackson: The thing about the left and the Labour party is that they are rarely matched in humbug and sanctimony; it is said that only they care about the poor and dispossessed. This moral sanctimony is not backed up by the policies that they have put into practice in government. If I may give the hon. Gentleman a history lesson, the Conservative party has been responsible for many progressive reforms over the years in social housing, public health and other areas. So I ask him to desist from lecturing the Conservative party on its moral values and beliefs. I merely contrasted the Chancellor's rhetoric with the record, which is not a good one to defend.
	In March, UNICEF rated the UK the lowest of 21 Organisation for Economic Co-operation and Development countries for children's well-being. It was an assessment of material well-being, health and safety, educational well-being, family and peer relationships, behaviour and risks, and subjective well-being. I made the point earlier that the weekly income of the bottom 10 per cent. of the working population fell between 2005-06 from 91 to 89.
	We see many examples of maladministration and error presided over by this Government. I could cite the 4,000 families overpaid tax credits in my constituency, the 1 billon-worth of tax credits fraud, and the disability living allowance frauda major part of the large-scale fraud that the National Audit Office has identified, which may add up to 3 billion. Even the Child Poverty Action Group has been moved to say that
	behind these figures are thousands of families struggling to survive when the overpayments are clawed back.
	What is to be done? I know that time is short, Madam Deputy Speaker. I commend to the House the work of the Adam Smith Institute in its Working Welfare report, which was published last week. The proposals in the document are that all people of working age who do not meet national disability criteria could face immediate work reviews; that job centres could be privatised and paid by results; that local authorities could be responsible for paying benefits; that absence from work without good cause could trigger a reduction in benefit; and that those with serious educational deficiencies could receive training and assistance, and similar treatment could be offered to those with drugs and alcohol misuse problems.  [ Interruption. ] Labour Members may sneer, but that has been tried in the US, and it has resulted in a 60 per cent. reduction in welfare rolls.
	Who would not wish to see people choose to work to improve their family life and future and to give them direction, instead of staying in the hinterland of welfare dependency? Certainly no one on the Conservative Benches would. In Wisconsin, there has been an 80 per cent. reduction in welfare dependency. I commend to the House the work of my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) and the Centre for Social Justice, and that of my right hon. Friend the Leader of the Opposition.
	Had we had a Conservative Queen's Speech, it would have contained legislation in favour of married couples, to increase the working tax credit and to lift 300,000 children out of poverty

Si�n Simon: How certain is the hon. Gentleman about what he is saying? It was notable that the Conservative Front-Bench spokesman did not mention either of the things that the hon. Gentleman has just mentioned or any of the things that he is about to mention. In fact, the Opposition spokesman did not say a single word about anything they might do or any reason why they might do it. One would think that the Conservative party had no economic policy at all.

Stewart Jackson: I trust that the hon. Gentleman will put my speech on YouTube. He has form in making a Charlie of himself in that regard [ Interruption. ]

Madam Deputy Speaker: Order. Perhaps we could continue with the debate on the economy and welfare.

Stewart Jackson: I have been as generous as humanly possible to the hon. Member for Birmingham, Erdington (Mr. Simon).
	A Conservative welfare programme would be about tackling long-term poverty and welfare dependency, and getting people into meaningful and long-term work, not Labour's bogus schemes to hide the real level of unemployment

Caroline Flint: Will the hon. Gentleman give way?

Stewart Jackson: No, I have not got time to give way.
	The right hon. Member for Birkenhead (Mr. Field) recommended as long as nine years ago time-limited benefits, a local focus on benefit delivery and tighter controls on immigration as ways in which the employment situation and welfare dependency could be tackled. It is a tragedy for this country and for the Labour party that the then Prime Minister did not have the courage of his convictions, think the unthinkable and listen to the right hon. Gentleman, who is a fine man who has done much good work in that area.
	I look at national policies unashamedly through the prism of their effect on my constituency, which has the highest level of unemployment of any area represented by a Conservative MP. I am very concerned about that. Some 2,000 young people26 per cent.are not in education or training, and that figure has not changed in the past five years. One in seven young people are unemployed. Disability living allowance cases have increased by 39.7 per cent. in the last 10 years. We cannot mend a broken society

Caroline Flint: On a point of order, Madam Deputy Speaker. The hon. Gentleman was talking about unemployment, but disability living allowance is paid to people in employment as well as those out of employment. That is an important point to recognise.

Madam Deputy Speaker: That is not a point of order for the Chair, but a matter for debate. I have no doubt that there will be further discussion of the issue in the winding-up speeches.

Stewart Jackson: I am sure that a student union debating style is de rigueur in the parliamentary Labour party. It is a shame that when I am talking about key issues that affect my constituents the Minister should follow the lead of the Prime Minister with facile, student union politics

Madam Deputy Speaker: Order. I suggest that temperate language is used in the Chamber.

Stewart Jackson: We cannot mend a broken society without dealing with the issues, especially fractured families. It may be unpopular to say so, but we must concede that we cannot tackle those problems only through economics: what we need is a moral culture in which people have responsibilities as well as rights. My party has a proud record of progressive incremental social reform and change in the areas that I mentioned, including housing and public health. We will not have a Conservative Government for a while [ Interruption. ] But we will have such a Government, and it will fall to them to continue that tradition and mend Britain's broken society.

John Mann: I congratulate the hon. Member for Peterborough (Mr. Jackson) on his excellent speech, which was an accurate demonstration of the true feelings of his party. I wish him well and hope that he is promoted to his Front Bench in the near future.
	It is helpful for the House to look back at what people have said and analyse why they have said it. I am not someone who stands up and calls for apologies, but I am interested in the evidence for people's past statements. I want to consider the Budgets and the Opposition responses to them since 1997, and to take specific examples from them. I would be pleased if the Opposition would contribute to the debate by outlining the research on which they based a number of miscalculations in Budget responses from successive leaders.
	In 1997, the then Leader of the Opposition stated that
	the cost of employing people with a minimum wage and social chapter will destroy jobs.[ Official Report, 2 July 1997; Vol. 315, c. 322.]
	We are now in a position to analyse objectively what happened economically, and the number of jobs increased rather than decreased. No economists have given any suggestion that the minimum wage destroyed jobs. It is important to consider whether that was mere political rhetoric, or whether there was an economic analysis behind it.
	The importance of that resonates more strongly if we take the example of the 1998 Budget. The then Leader of the Opposition stated that a
	minimum wage 'risks generating significant levels of unemployment among young people'.
	History demonstrates that the number of jobs increased, rather than decreased, as the minimum wage came in. I will not suggest that the minimum wage created jobs, but no jobs were lost because of it. However, for a second successive Budget the Conservative economic analysis was misjudged. I do not suggest that the Conservatives should apologise for the mistake, because it was a genuine one. However, what is important is the underlying economic analysis that led to it. There was more in the 1998 Budget. The then Leader of the Opposition also said:
	The Government are pursuing employment policies that are likely to destroy jobs rather than create them. [ Official Report, 17 March 1998; Vol. 308, c. 1118.]
	Again, history has proven that that was not the case as jobs were created after that Budget.
	In 1999, the then Leader of the Opposition, who stated that industry is in recession, was found to have misjudged what was happening. Industry did not go into recession. He stated that
	forecasts for this country have been downgraded more sharply than in any other country in the western industrialised world.[ Official Report, 9 March 1999; Vol. 327, c. 195.]
	After that Budget, the British competitive position improved compared with those of our main competitors. The Opposition stated that their expectation was that there would be a downward spiral relative to the rest of world and our major competitors, but the opposite happened. A trend is emerging.
	In 2000, the then Leader of the Opposition said that the Government's economic policies and Budget were creating
	a brain drain in this country.[ Official Report, 21 March 2000; Vol. 346, c. 876.]
	In fact, the increase in the number of non-doms has meant the reverse. There has been no brain drain, so the Conservative economic projections did not occur.
	There was a change of tone in the Conservative response to the 2000 Budget, however. Unlike their responses to the previous three Budgets, the Conservatives commented on general social policy, so their projection was that hospital waiting lists would become longer. In fact, hospital waiting lists went down in the year after the Budget and the position was maintained in future years, so the Conservatives were wrong.
	The Conservatives predicted that the 2000 Budget would lead to extreme damage to the market in the City of London. In fact, in 2000 and 2001, there was a boom in the City of London relative to world financial markets that consolidated its position as a world financial leader. Again, the economic analysis behind the Leader of the Opposition's response to the Budget was fundamentally wrong.

Stephen Crabb: I admire the hon. Gentleman's rational, evidence-led approach to the issues, but if his central point is that the Conservatives got their calculations and analysis wrong Budget after Budget, he must recognise the irony in his speaking from the Benches of a Government with a spectacular record in missing their forecasts and getting their calculations wrong.

John Mann: I shall talk about growth forecasts in a minute. What is uncanny is how accurate the Government's projections have been, especially on the economy. In social policy it is difficult for any Government accurately to predict what will happen in future, because many factors can influence social policy changes, and general trends can be identified more clearly than specifics, but the Government have repeatedly got their economic analysis pretty much spot-on. I shall set out some of the indicators that demonstrate that point, but I want first to consider the 2001 Budget, when the Conservatives were about to change their leader.
	In the response to the 2001 Budget, the then Conservative leader told us that the Government were
	steadily destroying Britain's competitive advantage. While they have been playing politics with the British economy our competitors have sharpened up their act.[ Official Report, 7 March 2001; Vol. 364, c. 314.]
	In fact, what happened the next year was exactly the oppositeour competitive advantage improved vis--vis the rest of the world. Again the Conservative party's underlying economic analysis was flawed and mistakenthe opposite happened.
	There is a pattern, and I shall explain why the Conservatives have been so misguided in their economic policy analysis. In 2002, the Conservative leader said:
	Britain's ability to compete in the world has slumped...the USA is overtaking us again.[ Official Report, 17 April 2002; Vol. 383, c. 598.]
	In fact, the opposite happened, so one might think that it would have been sensible for Conservative economic advisers to pull back from some of their predictions. Every year, one of their fundamental, major economic predictions was wrong.
	When we hold political debates we do not know what will happen, but in 2007 with the benefit of hindsight we can see what was right and what was wrong. The Conservative response to the 2003 Budget stated that as a result of the Chancellor's new taxes one in five firms would cut jobs, but in fact the number of jobs grew. One in five firms did not cut jobs; there was no economic basis for the claim.
	It is perfectly legitimate to debate what our social priorities should be and I am sure that the main parties will disagree about themmajorly or minorlybut yet again, uniquely, the Conservative party's economic analysis was wrong.
	In 2004, the Conservative leader predicted a downturn, which, by the way, rather conveniently allowed him to predict tax rises in Labour's third term. In fact, there was no downturn that year, so one began to hear a change of tone. It was claimed that the economic analysis that led to the political projections had been wrong, presumably to demonstrate the Government's lack of competence. However, when we look back, we see that the Opposition's claims demonstrated the Conservative party's lack of economic competence.
	In 2005, the Conservatives made a projection about a black hole, and we have heard about that again today. Therefore, those listening to the debate might want to recall that the then leader of the Conservative party said of the 2005 Budget that such were the finances, income tax would have to increase by 3p in the pound and that national insurance contributions would have to increase by 3 per cent. I might have missed that, but I do not think so: it did not happen, because it did not need to happen, as there was no economic downturn.
	Yet again, the then leader of the Conservative party's fundamental economic analysis was proven wrong. He cited examples that strayed into social policy, and I suggest to the Opposition that that is always unwise in their response to a Budget. He cited the chief constable of Nottinghamshire saying that police could not cope anymore. It just so happens that, being a Nottinghamshire MP, I have the Nottinghamshire crime statistics. Let us guess what happened in the year after the 2005 Budget: crime across Nottinghamshire came down, and that has continued to happen year on year. So even the attempt to use third-party support has backfired, which allows me to repeat that it is important that the Opposition stick to the economics and look at why there has been such a fundamental flaw in their economic analysis after every Budget.

Si�n Simon: I am not clearI do not know whether my hon. Friend can enlighten mewhether the Conservatives make those consistent, frequent, fundamental and basic errors of analysis in good faith, because they are not very good at sums or analysis, or whether they are quite cynical, opportunistic people who say things for their own political purposes in the most cynical way. It is quite important to know.

John Mann: I am sure that the Conservatives will want to respond from the Front Bench in their winding-up speech to state which it is. In 2006, they said that Britain could not compete in the global economy, but our economic position was competitive and did not worsen in the subsequent year, and the right hon. Member for Witney (Mr. Cameron) made by far the shortest speech on record by a Leader of the Opposition.

Stephen Crabb: Will the hon. Gentleman give way?

John Mann: No, let me inform the hon. Gentleman about the last Budget, when there was a major step change. I have now analysed all the speeches made by Leaders of the Opposition since 1997, and they have all been wrong on economic grounds, with a bit of social policy thrown in. Things were totally different in 2007, when they turned to a series of personal attacks. The economic analysis disappeared, presumably because, having looked back, they found that it was repeatedly wrong, but they got a bit carried away with the rhetoric, despite the fact that the speech was prepared. It was suggested that Britain was doing particularly badly in relation to France, the United States and Serbia and that we were about to run out of money. Again, since the Budget, we have not run out of money. I have not had the opportunity to look at the Serbian economy, but I am sure that the Conservative spokesperson will give us an analysis of how we have done in the past six months compared with Serbia, which was cited by the Leader of the Opposition in his official response to the Budget. We described previous leaders as boom and bust, but it is more like doom and gloom now, because that is what they have projected after each Budget in the past 10 years.
	Under the Tories, I set up and ran a business with my family. In those years, there were major problems, but now we have stability and consistent growth. Recently, we have been exceeding growth projections. Interest rates are stable and low, exchange rates and inflation are stable and average earnings are on a nice upward spiral but consistent. A small business such as ours required such a situation during the Major years, but we did not have it; it makes a difference to people wanting to make an investment.
	I shall cite the judgments of some independent analysts, most made within the past two or three days, although the first is about three weeks old. Jodie Tiller of CIBC World Markets said that growth was stronger than expected and mentioned
	stronger-than-expected retail sales.
	That is contemporary, current commentary. This weekend, the headline of the  International Herald Tribune was British economy powers ahead. That is the American view of the British economy this weekend. George Buckley of Deutsche Bank is upbeat about the British economy. GDP growth for the last quarter has been 3.3 per cent., rather than the projected 3.1 per cent., which Howard Archer of Global Insight describes as impressively resilient. Yet yesterday the financial press was saying that investment confidence was low in Germany and that for the US economy there was a bleak outlook with low consumer morale.
	I put it to the House that through having a stable economic projection year on year and not meddling with the boom and bust tendencies of previous Labour and Conservative Governments, the Government have allowed British business, small and large, to get ahead and do well. That is why we are more resilient to any short-term downturn than our main competitors. The situation leaves the Opposition rather exposed, because they have to say something at Budget time. What they ought to say is, Thank you for the success that you have had. We have differences in our spending priorities and we want to debate those genuinely. They should be honest and say, We accept that the British economy is booming, although we would use the proceeds of growth differently. That would be a legitimate debate. Instead, the Conservatives embarrass themselves by projecting doom and gloom every year and getting it wrong.

Justine Greening: Will the hon. Gentleman give way?

John Mann: No; I have three more points to make before I wind up.

Justine Greening: rose

John Mann: The hon. Lady will have a chance to respond.
	My first point is to those on my own Front Bench and is about labour market flexibility. On my analysis, we are about to get over the legacy of the Thatcher years, although it is still there in the figures reflecting the large number of people in their late 50s on incapacity benefit in constituencies such as mine. They were struck off the unemployment records in the '80s, as the Tory Government made them redundant from industries such as mining, shipbuilding and others.
	The fact that we are getting over that is good for the economy. However, I hope that the Treasury will seriously analyse an issue that we have not got on top of: drug dependency. There will be a financial cost if we do not return drug-dependent peoplewho are, on average, youngto work. The Government have a good and improving track record on getting people who have been on drugs out of crime. However, we must concentrate resources on what we need to do to get more such people back into work. The Treasury should take a lead, with economic modelling on the cost savings that would come from that. My own projections suggest that if we do not do so, the cost to the British economy over the next 40 years will be in the hundreds of billions of pounds, because a relatively young group of drug addicts are often not in work and claiming benefits and will do for a significant period of time.
	The British Chambers of Commerce recognised that capital gains tax taper relief for small business was a benefit to business brought in by a Labour Government, not a Tory Government. I hope that the measured way in which it put its case, unlike others, will lead to its getting proper access to Treasury Ministers to discuss its views.
	In the coalfield communities, there is a big legacy issue in which we move beyond economic success to aspiration. The coalfield taskforce, which was established in 1998 by the then Deputy Prime Minister, has done brilliant work in creating jobs, as my hon. Friend the Member for Bolsover (Mr. Skinner) outlined in Prime Minister's Question Time. We now need a taskforce to tackle aspiration and entrepreneurship in those communities. Generations in those communities have always had work provided for them. They now have jobs available that they did not have 10 years ago. In the next five years, the Treasury should take the lead in creating that aspiration and entrepreneurship, and the means to develop it, for the coalfields taskforce.

Stephen Crabb: I should like to offer some remarks about an issue that is of crucial importance to our economic stability and success in the decades ahead and which has been referred to several times in the debatenamely, energy security. Like the No. 53 bus, after a decade of waiting for a policy three Bills have come along at oncethe Planning Reform Bill, the Energy Bill and the Climate Change Billall of which are intended to provide solutions to the major energy security questions of our time. In the 10 years of this Government, energy policy has been in a state of near-continuous review. We have had White Papers, Green Papers and dozens of smaller consultation papers. We had a position on nuclear power outlined in the 2003 Green Paper that was subsequently reversed last year in a display of boldness by the previous Prime Minister, although he did it in such a cack-handed way that he ended up being dragged through the High Court by Greenpeace.
	Meanwhile, during the past 10 years the world has moved on. Oil is now trading at about $90 a barrel, driven in part by the fast-growing, energy-hungry economies of China and India. North sea oil and gas production has fallen into sharp decline, and the fiscal regime governing exploration, production and decommissioning of fields in the North sea is not attracting sufficient investment to maximise production in these mature fields. That was alluded to by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), who is not in his place.
	Throughout the past decade, the UK has moved from being a net exporter of energy to a net importer of energy. That will accelerate in the years ahead and increasingly hit our balance of payments. Our nuclear industry has also been underperforming. Last year, there was a decrease of more than 7 per cent. in electricity production from nuclear sources as a result of the high level of outages due to repairs and maintenance. In the past 10 years, we have become even more reliant on imported coalthe dirtiest hydrocarbon source for electricity generationfrom South Africa, Australia and South America.
	In terms of our contribution to tackling climate change, which is an integral and important part of the debate on energy security, performance in the past 10 years has been uninspiring, to say the least.

Madam Deputy Speaker: Order. I hesitate to bring the hon. Gentleman to order, but if he looks at today's Order Paper he will see that we are discussing an amendment tabled by the Leader of the Opposition that covers several areas but is to do with the economy and welfare rather than energy policy. Perhaps he could bear that in mind in making his observations.

Stephen Crabb: I apologise, Madam Deputy Speaker. The issue has been referred to in the opening speeches from both Front Benches, and it is a vital part of the debate about the economic performance of our country.

Madam Deputy Speaker: Order. It is fine if the hon. Gentleman is about to relate his remarks to the subject as it might affect the economy. A reference is acceptable, but this is not a debate entirely about energy policy, important as that might be.

Stephen Crabb: I am grateful for that clarification, Madam Deputy Speaker.
	One way in which the economy of my constituency has been affected by energy developments in the past few years is the construction of two huge liquefied natural gas import terminals in Pembrokeshire. Those will be a vital part of the energy infrastructure required to ensure that our lights are kept on in the years ahead. Those projects have helped to eradicate male unemployment.

Chris Ruane: Under a Labour Government.

Stephen Crabb: The hon. Member for somewhere in north Wales says that that was due to a Labour Government. People in the industry with real knowledge about the issues say that those projects, like other gas import projects such as the Langeled pipeline and the LNG project in the Isle of Grain, were brought forth as a result of Britain's liberalised gas markets. Price signals and other market information provided the context within which the private sector could bring about huge investment decisions. It is not just down to the Labour Government, but to markets working efficiently.

Si�n Simon: To clarify what the hon. Gentleman thinks that my hon. Friend the Member for Vale of Clwyd (Chris Ruane) said from a sedentary position, the hon. Gentleman seems to have massively misunderstood the extent to which a Labour Government is the opposite of a market solution. In the past decade in this country, a Labour Government with concerns for social justice, child poverty and all sorts of socially progressive things at their core have delivered outcomes using the mechanisms of the market. That is why employment in the energy sector in his constituency is so much higher than it was under the Tory Government, when it was so much lower, even though they supposedly understood how markets worked.

Stephen Crabb: I hear the hon. Gentleman's point.
	With regard to the link between energy and the economy, gas development is the only bright spot in the past 10 years of energy policy development in this country. The energy industry and the private sector are waiting for some bold decisions to be made about where our energy will come from in the next 10, 20, 30 or 40 years. That is vital to the economic future of our country. Big decisions need to be made. There were three Bills in Her Majesty's Gracious Speech that seek to address such factors.

Adam Price: Notwithstanding the direct employment benefits to the hon. Gentleman's constituency of the LNG pipelinehe and I have very different views on its wider benefitswhat ideas does the Conservative party have to regenerate the wider economy in Pembrokeshire, which has some of the lowest wages in the United Kingdom? We cannot build more and more pipelines. What ideas does the Conservative party have on regional economic policy?

Stephen Crabb: My constituency, which is not too dissimilar to that of the hon. Gentleman, relies a lot on micro-business, and the small and medium business sector. If he had been present earlier during the debate and listened to some of the speeches by Conservative Members, he would have heard excellent ideas on how we strengthen that vital backbone of our economy, such as changes to the fiscal regime and investment in skills to ensure a ready supply of skilled workers for the small business sector. Those issues are vital. His constituency and mine have both seen drops in headline rates of unemployment during the past 10 yearsthe Opposition will not deny thatbut in our constituencies, and throughout the country, there are still serious problems, with a growing number of young people not entering education, employment or training, and a stubbornly high rate of people on sickness and incapacity benefit. We need to tackle those areas.
	In west Wales, the rural economy in some sectors is being kept going by imported foreign labour. In the hon. Gentleman's constituency and mine, foreign labour is keeping a lot of rural businesses, such as care homes, nursing homes, farms and poultry businesses, ticking over. Now that is not a sustainable solution. As I said earlier, the phenomenon of many highly motivated people coming in from eastern Europe, often with a strong work ethic, has let our Government off the hook in tackling those serious problems.

Adam Price: The hon. Gentleman is right to raise the effect of migrant labour, which depresses wages in some parts of the country that already suffer low wages. Does he support the TUC's campaign to extend the remit of the Gangmasters Licensing Authority to cover other sectors such as construction, manufacturing and retail so that we can have fair pay for all workers in those sectors, too?

Stephen Crabb: I am not sure whether I agree with the hon. Gentleman's point that foreign labour depresses wages. If he talks to some of the businesses in west Wales to which I have spoken, they will tell him that they pay exactly what they would pay an indigenous Welsh person. The problem is that indigenous people with such skills are not there. If he visited the energy projects in west Wales, he would see a lot of foreign labour, working for exactly the same rates and on the same terms and conditions as the Welsh lads there.

Julia Goldsworthy: I want to make a similar point to that of the hon. Member for Carmarthen, East and Dinefwr (Adam Price). Does the hon. Gentleman support the extension of the gangmasters legislation to construction and care homes, when it would make an impact on protection for those migrant workers?

Stephen Crabb: Given that two hon. Members have made the point, I should examine that important policy recommendation. I shall do that.
	It is an exciting and challenging time for our country. Two different narratives have been presented by the two sides of the House about economic performance. Much revisionism is going on, perhaps on both sides, too. However, there are major challenges ahead, not least in energy security, as I began to outline at the start of my speech, but also in tackling skills and ensuring that we can compete in an increasingly globalised world.
	The powerhouse economies of India and China have been mentioned. Unless we improve the skills of our work force, make the necessary investment in higher education and stop closing down science departments in British universities, we will not produce the skilled work force that we need to compete with those economies.

Sally Keeble: It is a pleasure to speak in the debate on the most important issue for my constituency. The hon. Member for Preseli Pembrokeshire (Mr. Crabb) mentioned revisionism and I would like to revise some of the figures that the hon. Member for Peterborough (Mr. Jackson) cited. He said that unemployment in his constituency had increased and that it had one of the highest unemployment rates in the country. According to the latest statistics in the report that the Library produced, unemployment in Peterborough has decreased by 22.4 per cent. and currently stands at 4.6 per cent., which is close to the figure for my constituency. The hon. Gentleman muddled that figure with the position of those not in education, employment or training. I shall deal with that later, but he should congratulate the Labour Government on the outstanding impact of their economic policies on reducing unemployment in his constituency.
	Indeed, the economy's strong performance, thanks to the Government, has been of the greatest benefit to my constituency. During the debate, several hon. Members referred to Northern Rock. One of the factors that came out in the interesting Select Committee hearings is, perhaps surprisingly, the lack of panic that all the authorities displayed about the impact of Northern Rock and the credit crunch generally on the UK economy, and the prospects of a repeat. The enormous stability in the economy and especially the strength of the banking sector were cited as having made it possible to manage our way through a difficult period. The great stability on the macro level has, therefore, also been important on the micro level. In my constituency, unemployment has decreased by a third while the Government have been in office, but we have had historically high participation in the economy, with a huge work ethic.
	When the town started to grow, as part of the expansion of new towns in the '60s and '70s, people came from London and Liverpool because they wanted work, homes and a better life for their families. That has remained the overwhelming ethic of the town and of my constituency. Reflecting the economic mood, Northampton chamber of commerce recently cited improvements in the manufacturing industry and increased optimism in the sector, with four in 10 manufacturers reporting improved cash flows for their businesses, which, ironically, is reported by only 20 per cent. of service companies. Manufacturers have reported higher UK sales, with 44 per cent. seeing an increase, against 41 per cent. of service companies. The outlook is generally positive, and I am particularly pleased that the optimism is coming from the manufacturing sector this time, not just from the service sector.
	The question for us now is how the Government can best support a working and aspirational community. The measures in the Queen's Speech are particularly important in that respect. To a certain extent the economic measures are important, but many of the other measures will contribute to the economic success and well-being of my constituents too, such as the measures to improve the work-life balance. There is enormous participation in the economy by women in my constituency, with 83 per cent. of women in Northampton working, which is well above the national average. There has tended to be a pattern of partners staggering their working hours, so that they can share their family commitments. I remember receiving an extraordinary letter from a constituent in her 60s who berated the Government for introducing child care, saying that she thought that parents should look after their own children. She said that she and her husband had shared their child care, with her going to work in the evening, only after he had come home.
	There are also measures for more social and affordable housing, which will be extremely important for the young families currently diverted into private sector rented housing. Above all, however, the measures that will probably benefit the economy the most are those concerned with education and training. I refer again to the comments that the hon. Member for Peterborough made about the increasing numbers in the new category of NEET. A number of the measures in the Queen's Speech, particularly the new apprenticeship scheme and the raising of the education leaving age, are about ensuring that those young people have better prospects in life and get into either training or employment.

Julia Goldsworthy: Does the hon. Lady agree that a large number of young people who fall into that category will have complex needs that tie in with demands on other Departments? Does she agree that although multi-agency work has helped to tackle such problems, such work is the first to be cut when there is pressure on local government and budgets are squeezedthat has been the experience in my constituencythereby undermining the support that those young people need to be offered?

Sally Keeble: I certainly agree that large numbers in that group often have complex, compound needs, involving combinations of social dysfunction, family dysfunction, drug problems and suchlike, particularly in areas where employment levels are high and the economy is strong. However, some of the work being undertaken by the agencies has already been able to overcome such problems. Perhaps the hon. Member for Peterborough and others who have particular problems with that group of young people would do well to look at what my local Connexions service has done. It was set targets to reduce the number of young people not in education, employment or training. It has well exceeded those targets and, by working closely across the different agencies, has been able to get young people into work and training and to ensure that they do not fall through the holes in the safety net. The new measures in the Queen's Speech will be important, but work is already being done.
	One of the factors repeatedly cited by local employers in relation to the prospects for improving the performance of the local economy is the skills level among young people. In that regard, the amount of money that the Government have put into rebuilding schools and improving the pay structure and performance of teachers has been extremely important. All the secondary schools and most of the primary schools in my constituency have been rebuilt. I pay tribute to the teachers and head teachers who, during the chaos of the building work, nevertheless helped to achieve improved exam results for the first time in a long time. That is very welcome and will produce a real improvement.
	There are still concerns, however. I am sorry that I was not in the Chamber for the whole of the speech by the hon. Member for Eastbourne (Mr. Waterson). I certainly agree with him that one of the biggest concerns among our constituents now is to ensure that they have security in retirement. When people have worked hard throughout their adult working life, they are entitled to expect to be reasonably comfortable when they retire.
	Women in employment, in particular, have missed out. That is why I am so pleased that the Government are going to set up new pension schemes that will, I hope, tackle for the first time the disadvantages that women have experienced in retirement. As I said earlier, 83 per cent. of the women in my constituency work. In the past, their earnings have fallen well below those of men. They are starting to catch up, but a typical comparison is still 380 a week for women compared with 495 a week for men.
	The Turner report clearly identified that women were poor in retirement and fell behind not only because they did not receive the state pension but because they did not have a pension scheme linked to their employment. Overcoming that problem would provide a real breakthrough for women in retirement. I look forward to the new legislation, which will have to ensure that, for once, women can get pension schemes that are linked to their employment and that will enable them to make the right provision for themselves in retirement. It has been mentioned by several hon. Members that a key factor in these proposals is the extent of consensus that exists, because the extent to which people will participate in the schemes, and their viability, will depend on that.
	One of the medium-sized employers in Northampton talked me through his pension scheme very carefully, because he was most concerned about the fact that it was reaching a point at which it was no longer viable. His biggest problem was the fact that many younger people had simply opted out of the scheme. The age profile of the scheme was therefore changing and it really was not working. He was thinking about having to close it. I could see that that was not just because of the financial aspects of the provisionhis scheme looked very goodbut because of the perceptions of the young people. Some of them thought that what one should do was to go into another pension scheme, rather than the company scheme, and the system was gradually falling into decay.
	Of course, people need good advice and there must not be any mis-selling. People have to look at what is in their best interests, but when the new schemes start off, it is important that they are given support and not undermined by constant rubbishing. I have to say that we have heard rather too much rubbishing of the proposed new scheme from Conservative Members.

Nigel Waterson: I knew that it was too good to be true when the hon. Lady paid tribute to my speech earlier. Which would she rather have? Does she want people to go into the scheme with their eyes closed, ending up no better off or, in some cases, worse off; or should they go in fully informed and aware of how the scheme was created for people on low incomes and on interrupted work patterns, who may have to rent in retirement?

Sally Keeble: The scheme obviously has to be designed to meet the needs of a changing work force, particularly for the growing number of women who may have some interruptions in their careers, but increasingly short ones. It is also important to show confidence in the scheme. People should start with the assumption that it should be looked at positively, rather than thinking, Oh, this is a rubbish thing, but people say I will be better off; it may be better just to wait. At the end of the day, that will become a self-fulfilling prophecy. It is a difficult one to juggle, but if the scheme is constantly run down in the way that occupational and other schemes were undermined, we shall find exactly the same problem; schemes will not work properly because they will not have enough people in them.
	I should like to take up a further issue with my right hon. Friend the Secretary of State for Work and Pensions, who I am sure will deal with it. What happens to pensioners who are on medium or modest incomesas many of my constituents will be on retirementand who own their own homes? There are some difficult issues about the expense of home ownership for pensioners who are asset rich and, if not poor, at least on modest means. The issue is repeatedly brought up with me by constituents, who find that they face real financial difficulties in maintaining their homes. If they sell and try to downsize, the economics of that does not work either. I am thinking particularly of people who bought the Conservative party dream and moved from the inner cities to Northampton, bought their own council homes, but now find themselves well past retirement age and facing real difficulties. They often say that although things such as the Warm Front initiative are important, they are not enough: they need to be able to release some of the equity in their homes to make them habitable, comfortable and secure for their retirement.
	Will my right hon. Friend look into this problem and see whether there is any way of providing further supportother than through the warm homes scheme, which is extremely good, but only goes so farfor pensioners in this situation with financial difficulties? It would help them if some equity could be released and put into home improvements so that they avoid the need to remortgage, which is a problem, or to go into some of the more difficult equity release schemes, which could land them in even worse financial problems. As I said, pensioners have raised this issue with me on a number of occasionsmainly those who have bought their homes, provided for their retirement and done all the right things, as it were, but who find it more difficult to manage their homes, particularly the capital costs of improvement, as they get older.
	Overall, however, the Queen's Speech contains important economic measures such as those on security of deposits and use of dormant accounts, and a large number of measures that will improve the economic performance of my constituency and the well-being of my constituents. Those measures will ensure that this Government meet the aspirations of the people in my constituency and other areas of middle England.

Philip Dunne: I must apologise to you, Madam Deputy Speaker, for not being able to attend the opening speeches this afternoon as a result of my Select Committee duties.
	It is a great pleasure to contribute to the debate on the Gracious Speech and to follow the hon. Member for Northampton, North (Ms Keeble), who clearly either read a different Queen's Speech or made a very different interpretation of the one that I read. I am afraid that I found the speech a great disappointment. It lacked the famous vision about which much has been said in and outside the Chamber. It seemed to lack a recognition of many of the problems that beset our economy, to which I wish to address most of my remarks. Consequently, it lacked any serious attempt to provide solutions to the problems that we face.
	We must remember that the economy is currently facing challenges posed by global shifts in economic power from, broadly speaking, the industrialised nations of the 20th century to what will become the technological nations of the 21st century. In part, the way in which our economy reacts to that is causing seismic changes. Currently, this country has the lowest savings ratio that it has ever had, business investment in manufacturing is half the level of 10 years ago and we are rapidly losing our historic manufacturing base. Nothing in the Queen's Speech attempts to address those fundamental problems. In part, that is the result of a change of leadership at the top of Government. Now that senior members of the Government are four months into their new roles, we have the opportunity to see how they are getting on.
	The new Chancellor has, I must admit, an unenviable position to defend. In the third month of his reign as Chancellor, he has presided over the first run on a bank in this country for 141 years. I will return to that in a moment. Last month, the Chancellor also had the opportunity to introduce a pre-Budget report. His disappointing performance in that pre-Budget report and subsequent events have shown him unravelling before our eyes. There were relatively few innovations in the pre-Budget report of the Chancellor's own inspiration. He seemed to look elsewhere for inspiration, notably to some of the inheritance tax proposals introduced so spectacularly by my hon. Friend the Member for Tatton (Mr. Osborne) a few days before the pre-Budget report. Miraculously, those proposals appeared in the Chancellor's speech, and he has found it difficult to admit to the date on which he first started to think about them.
	The one idea that the Chancellor had of his own was to simplify capital gains tax on business. He introduced a flat rate instead of the plethora of rates, tapers and reliefs. That can undoubtedly be traced back to the desire to introduce a higher rate of taxation on private equity executives who had been exploiting an apparent loopholeit was not a loophole, but a 10 per cent. rate of capital gains tax introduced by the Prime Minister, when he was Chancellor, back in 1998. Undoubtedly, that was one of the few measures for which the business community would regularly applaud the Prime Minister during his tenure as Chancellor. His successor decided that instead of living with a competitive rate of capital gains tax for entrepreneurs, he would virtually double the rate to 18 per cent. to address a politically inspired assault on a very narrow segment of the business community, namely private equity executives.
	That idea was ill thought through. We know that it was ill thought through because the Chancellor confessed in evidence to the Treasury Committee that he had not discussed the proposed changes in capital gains tax with any of the traditional representatives of business, large and small, with whom the Treasury normally has regular dialogues, not about taxation rates but about fundamental changes in the structure of taxation. He was forced to make that admission because the representatives themselves were telling anyone who cared to ask them that there had been no consultation on the changes before their introduction. It is not surprising that this rushed measure introduced to deal with another problem has caused uproar in the business community. Such is the uproar that the Chancellor has had to come crawling back to the House to say that he is thinking of introducing some reliefs.
	Let us spend a moment thinking about the consequences of the muddle over this measure for the economic lifeblood of the country, particularly the small business man. By introducing an 80 per cent. increase in capital gains tax, the Chancellor is clobbering the owners of the 4.5 million small and medium-sized businesses that represent the engine of growth in the economy as we move into the new era to which I referred at the beginning of my speech. They have been most vociferous about the effect that the increase will have on the way in which they plan investment in their businesses.
	The Chancellor's action has also had a significant impact on savers in employee share schemes, some of whom were expecting to pay tax at rates as low as 5 per cent. under reliefs and other schemes that will remain in place until the Finance Bill is enacted. According to ProShare, hundreds of thousands of them will have to pay tax at the new 18 per cent. rate.

Paul Farrelly: Many years ago, when I was advising mostly small businesses on sales, the level of capital gains taxunder a Conservative Governmentwas the same as the higher rate of income tax. Even after these changes it will be at half that level, and below the standard rate of income tax. I think that those who realise capital gains are still being given a very good deal. Does the hon. Gentleman not agree?

Philip Dunne: I believe that since the hon. Gentleman left professional practice, capital gains tax rates have fallen in our main competitor nations. The new 18 per cent. rate is substantially higher than the rate for those seeking to set up businesses in Switzerland, Hong Kong or Ireland, and I think it is higher even than the rate in France. As I said at the outset, we are now in a global environment. People do not decide where to locate their businesses purely from an incorporation point of view or in the light of the current level of income tax

Oliver Heald: What about taper relief?

Philip Dunne: Indeed, the abolition of taper relief has a significant impact on the actual level of tax that people must pay.

Oliver Heald: Is it not particularly dismal that this is a tax on our future as a nation, and that it hits young people? It is all of a piece with the Government's failure to consider the proposals to remove stamp duty on first-time purchases of houses, and in the same bracket as their failure to include in the Queen's Speech any measure to reduce the number of young people who are still unemployed and not being trained.

Philip Dunne: I entirely agree. There was very little in the Queen's Speech to stimulate the economy, and quite a lot to restrain entrepreneurial endeavour.
	It not only those who will be affected by the tax changes who have been complaining so much; it is Ministers themselves. The Minister for Trade Promotion and Industry has been quoted as saying that this is a terrible proposal, and he is supposed to have been having a quiet word with the Chancellor. A week after the Minister made that statement in Bolton, I asked the Chancellor whether they had had an opportunity to speak and I regret to say that they had not. Either the Chancellor was not listening when the Minister was passing on the views of business men from Bolton, or they do not talk very often.
	As a consequence of that measure, there is now a form of paralysis in the small business environment. Investing for capital gain in one's business is a long-term process. It is not undertaken lightly. One does not switch in and out of that. Through abolishing the taper, the Government have removed an encouragement for long-term investment. They are now actively encouraging short-term investment. Because of the muddle over whether any reliefs will be introduced in the Finance Bill, individuals who make investment decisions do not know what to do. They have a six-month window of uncertainty about whether there will be any relief, and whether they should sell their business now if they have been thinking of retiring in the foreseeable future, or hang on. They do not know. It is characteristic of the muddle that is at the heart of the Government. I urge the Economic Secretary to encourage the Chancellor to publish his proposals on the reliefs as soon as possiblenot to wait until the next Budgetso that people have time to understand where the Government's thinking is going and possibly to act on it.
	I would like to talk finally about another area of muddle and confusion and its effect on the stability of the economy. Those of us on the Treasury Committeethere are a couple of its members presenthad the benefit earlier this week of hearing Professor Buiter, one of the original members of the Monetary Policy Committee, give his views on the causes of the problems in the system that gave rise directly and indirectly to the terrible run on the bank, which the economy should never have suffered. He made it crystal clear that in his view, and in the view of other learned economists who have given evidence to us, the tripartite regulatory system that was established by the present Chancellor when he was Chief Secretary in 1997 is fundamentally flawed. There is no clarity as to who is responsible for taking the ultimate decisions that have to be taken.

Si�n Simon: To be clear, the professor did say that it works but that it did not work well. He mentioned one change: if the Bank were given some oversight of liquidity, it would work very well. It is not quite as bad as the hon. Gentleman is making out.

Philip Dunne: The hon. Gentleman is being a little kind-hearted in his interpretation of what we heard. A number of criticisms were levelled against the system. Some aspects of the tripartite system did not work well, including the fact that no joint statement was made by the three components of the system. The professor specifically criticised the Chancellor and his predecessor, the Prime Minister, for dithering and not making an announcement to back up the proposals for the lender of last resort, with a deposit guarantee at the same time.
	The hon. Gentleman will recall that the three-day interval was the main reason why the run took the time it took. Had a clear statement been made and had deposit protection been put in place at the same time as the lending facility was established, there would not have been a run on the bank. That shows that it is difficult in a tripartite system to have clarity as to who is in charge and who makes the decision. That system was set up by the Chancellor and his predecessor. Effectively, they have been fingered with some element of responsibility for that. It goes back to the issue that I was discussing earlier. When we look at competence in the stewardship of the economy, we have to face the fact that we have a set of senior Ministers in place who are presiding over muddle and confusion. I regret that that is the case, but that is the situation that we find ourselves in. I thank you for calling me, Madam Deputy Speaker.

Chris Grayling: Is this really the best they can do10 years after they played the song Things can only get better from every loudspeaker and battle bus around the country, 10 years after the Prime Minister stood up in this Chamber as Chancellor of the Exchequer and promised action on investment, skills and employment opportunities, and 10 years after he stood at the Dispatch Box promising more to help the poorest pensioners? Unfortunately, this really is the best he can do, even though he has been planning for this moment all his lifehe has had 13 years longer to prepare for it than he originally planned. He has built up networks of people and organisations to help him, from the Smith Institute to Deborah Mattinson. He set up policy teams in the Treasury to help him plan his agenda for the future and his move on No. 10. He shipped teams of advisers and speechwriters in from north America to help him. Never in the history of British politics has an aspiring Prime Minister been given so long to plan his agenda for Britain, and never in the history of British politics has so much work come to so little.
	The right hon. Member for Oldham, West and Royton (Mr. Meacher) was absolutely right to say that his party still has a real need for a distinctive visionalthough I must say that it is not the only party in the House without a distinctive vision, as today's Liberal Democrat amendment was so narrowly phrased that even its spokesman did not want to move it.

Si�n Simon: It is a bit rich of the hon. Gentleman to be telling us about distinctive visions when the shadow Chancellor did not mention a single one of his policies or a single aspect of the Conservatives' position, which is totally lacking in vision. Who are they to stand up and tell us about vision?

Chris Grayling: What a load of nonsense. My hon. Friend the Member for Tatton (Mr. Osborne) gave a whole series of policies and ideas, many of which the Chancellor pinched and put into his autumn statements.
	Back in 1997, the current Prime Minister made his first Budget speech, in which he set out his priorities. He told us that,
	we must address the four weaknesses that have held us back for too long and for too many years: instability; under-investment; unemployment; and waste of talent.[ Official Report, 2 July 1997; Vol. 297, c. 303.]
	Ten years and billions of pounds of spending later, the reality is rather different from the rhetoric. We have had the first run on a bank for 150 years. Personal and public sector borrowing is running out of control. Youth unemployment is higher than 10 years ago. The poorest pensioners are getting poorer. We have a higher proportion of children being brought up in workless households than any other country in Europe. As my hon. Friend the Member for Peterborough (Mr. Jackson) rightly pointed out, almost 5 million people in the country are stranded on benefits. Also, the proportion of British people in work is falling.
	Whatever happened to the promises on skills and education, when one in five school leavers cannot even read or write properly? Whatever happened to the promises on investment and manufacturing when we continue to fall down the world competitiveness leagues, when employment in manufacturing continues to dropas my hon. Friend the Member for Ludlow (Mr. Dunne) ably pointed outand when the Government continue to bring forward ill-thought-out changes to taxation and regulation that make it increasingly difficult to do business in this country, as my hon. Friends the Members for Northampton, South (Mr. Binley) and for Preseli Pembrokeshire (Mr. Crabb) eloquently said? Whatever happened to that so-called man of principle who stood at the Dispatch Box in this very debate 11 years ago and railed against Conservative ideas on inheritance tax? He told us then that the Conservatives were putting the interests of the privileged few ahead of the interests of the many. I wonder how many of his friends imagined back then that, as Prime Minister, he would be so panicked by a Conservative announcement on inheritance tax that he would steal the policy and claim it for his own a matter of days later. I thought he might at least wait a few months so it did not look too obvious, but our Prime Minister is clearly not a man who does well when on the back foot.
	It is interesting to look back at the Prime Minister's last speech from the Opposition Benches on a Loyal Address, which he gave just before the 1997 general election, and in which he set out all his flagship policies, demanded change and called in terms of skills for the introduction of a university for industry and for individual learning accountsboth subsequently introduced and both subsequently failed. Hundreds of millions of pounds of taxpayers' money were wasted. The hon. Member for Coventry, North-West (Mr. Robinson), a former Minister and colleague of the Prime Minister, said that the Government need to do better on skills.
	In the same speech from the Prime Minister that I mentioned, a new national employment policy was called for to tackle the issue of workless households. That was, again, subsequently introduced and billions of pounds were spent on it, but 10 years later, nearly one household in five is workless and the number of children brought up in poverty is rising. The Prime Minister also had a new savings policy, which he said would channel investment, but 10 years later, we have another fiasco. Savings have collapsed, the number of people saving for retirement is down by 2 million and 125,000 people who took the trouble to save for their retirement have been left with a fraction of what they expected, as their funds were swept away by this Government's and this Prime Minister's great pensions disaster.

Oliver Heald: Does my hon. Friend agree that the attack on entrepreneurship is an attack on the nation's future? It affects issues such as future youth unemployment, and it is a disgrace that this Government are doing so little for the future of this country.

Chris Grayling: I agree with my hon. Friend. I find it extraordinary that a Chancellor who gives us so much talk about enterprise does the opposite when he puts into practice the policies in which he believes.
	The absence of any measure in this Queen's Speech to help those 125,000 pensioners is one of the biggest blights on this set of proposals. Last summer, this Government sheltered behind the Parliament Act 1911 as they sank the pensions lifeboat, which Conservatives and hon. Members from both sides of this House sought to introduce to restore pensioners to a reasonable level of income in retirement. Some people are living beyond retirement with a fraction of the income that they have been promised, some are struggling with serious illness, even having to carry on working while receiving treatment to make ends meet and some are faced with the prospect of selling their homes.
	The Government's financial assistance scheme was supposed to provide such people with the help that they need. Instead, it has spent more on administration than it has paid out to pensioners, and even when it occasionally pays out money, it still offers them only a fraction of the money that they expected. In the past few months, the best that the Government have been able to offer these people is a review of the options. We are waiting with bated breath to see what Andrew Young recommends. I genuinely hope that he finds an easy solution to the problem and that this Government implement it quickly. If he does not, I say to Ministers, and to those pensioners, that we will bring back our proposals for the pensions lifeboat and we will carry on our fight to get them implemented. I have given a public commitment to implement those proposals within the first three months of the next Conservative Government, but now that the election has been postponed, those people cannot wait that long. They need help now. So let me say to a Government who are developing rather a habit of stealing ideas from the other side that they are welcome to take this one. I will personally gift wrap it and deliver it to their door if they will just get on with the job and give those pensioners the support that they need.
	Of course, the pensions debate in this Session will be much broader than that. Over the coming months, we will debate the final elements of the Government's pension reforms, the package that they have put together in the wake of the Turner report. Let us be clear that reforms to our pensions system need to be long term and they need to be able to outlast changes in Government. That is why there has been such a focus on achieving consensus on the reforms. Conservatives want the reforms to work, but I am not prepared to abandon the need for a real debate about their detail in an attempt simply to defend the principle of consensus. The reality is that there are still problems with the reforms, and they must be sorted out in the process of debating the pensions Bill.
	I have written to the Secretary of State setting out a number of concerns. The big unaddressed issue is how the package will sit alongside the system of means-testing that this Government have introduced over the past decade. The means-testing system for pensioners represents another of the Prime Minister's great U-turns, because in Opposition he railed against the idea of means-testing for pensioners and set himself the goal of eliminating it, but in Government he has established a process to draw more pensioners into means-testing than ever before. If the pensions Bill goes ahead without further modifications to how the system works, some people who save for retirement will derive no benefit from having done so.
	Labour Members know full well that setting aside a few hundred pounds a year for retirement represents a big commitment for somebody earning 12,000 a year. For that person to reach retirement and discover that they have effectively lost their savings, because their income is no greater than it would have been had they simply waited for means-testing, cannot be right. We are happy to engage in a constructive debate with Ministers about how to deal with the problem. One option might be a system in which people are able to take back part of their contributions if they reach retirement and are still below the means-testing limits. Other organisations have suggested different routes, and we have seen suggestions in the past couple of days.
	I want to see Ministers work through the options available and present them to the House so that we can debate the issue properly. If we do not deal with the problem now, when the Conservative Government we intend to form introduce the reforms in 2012, they will not work as well as they should. If some people are in danger of losing out, the story will be written whatever I say and whatever the Secretary of State says. The story will be written of people moving in and out of work or people who do not own their own homes putting aside money for retirement, reaching retirement age and seeing their friends who did not save getting exactly the same income in retirement.
	In a society in which people have a propensity not to save, many will use that fact as an alibi for opting out. As a result, personal accounts may struggle to get off the ground. If that happens, the cost to future generations of taxpayers of pension provision is bound to rise. If the Government put their head in the sand on the issue, their successors will have a big price to pay. We have already seen one major pension reformstakeholder pensionsfail to deliver what the Government promised. We cannot afford for that to happen again, which is why I will not shirk from challenging the Government over the flaws in their plans. It is why I will fight to ensure that the changes that are needed are put into place now. We should not have to wait for a change of Government to get it right.

Paul Farrelly: rose

Rob Marris: rose

Hon. Members: Give way.

Chris Grayling: I give way to the hon. Member for Newcastle-under-Lyme (Paul Farrelly).

Paul Farrelly: I have listened carefully to the hon. Gentleman's litany, which implies that everything was rosy in Tory times. I remember 3 million unemployed; the monetarism-induced recession of the early 1980s; the stock market crash in 1987; the recession of the early 1990s; negative equity; and Black Wednesday. What I cannot remember in the 18 years of Tory rule are 10 years of uninterrupted economic growth. Can he tell us when they happened?

Chris Grayling: I am not sure whether that was an intervention or a speech, so I shall give way to the hon. Member for Wolverhampton, South-West (Rob Marris), in the hope that he has something constructive to say.

Rob Marris: The hon. Gentleman talks about reaching consensus, and I wish to press him on consensus on the financial assistance scheme. The Government have bailed out Northern Rock, for which they were not the guarantor of last resort, although they became so. I think that the Government should go 100 per cent. on the FAS, but the lifeboat scheme is not a good way to produce the funds to do so. I declare an interest, because my wife and I have an endowment policy with a company that will have excess funds. The lifeboat scheme would nick money from those excess funds, which could come to me, and give it to pensioners. I want a good deal for those pensioners, but the lifeboat scheme that the hon. Gentleman proposes is a deeply flawed way to achieve it. Let us have consensus on 100 per cent., but look at a different mechanism for funding it.

Chris Grayling: I accept the spirit of that intervention and I suggest that we work through the detail in Committee. I would be delighted if the Government would propose a different package that achieved the same goal. The issue is sorting out the pensioners, and how we do it can be a different creaturebut let us at least do it.
	The Queen's Speech was born of political expediency, not a vision for a better Britain. It was all about Gordon knows best, and not about the British people knowing best. Of course there are some things in it that we welcome, such as the support for youth projects, and the measures on climate change and deposit insurance. But too much of it is a rehash of the failed messages of the past 10 years. Indeed, Ministers sometimes appear to have forgotten just how long they have actually been in power. That is why we keep hearing them giving history lessons and trying to pass the buck back to the past. Do they not realise that there comes a time when Governments have to take responsibility when things do not work out? Do they not realise that the first-time voters of 2010 were five years old when they came to power? Do they not realise just how absurd they sound when they try to create alibis that are more than a decade old to excuse the waste and the failings of this Government?
	Debates on the Loyal Address have always provided Oppositions with an opportunity to lay bare the failings of a dying Government. In the debate on the same subject 11 years ago, the present Prime Minister stood at the Dispatch Box and laid into his opponents. I wonder whether he could ever have realised how appropriate his words would prove to be when repeated by his future opponents to describe the failings of his exhausted Government. He said:
	The Queen's Speech shows that, whether it is education, law and order or the economy, none of the problems that the country faces can be solved by the Government. Problems will be camouflaged, disguised, made the subject of U-turns, and exploited for narrow party political ends. The Government may even try to throw money at them, but they will never solve the fundamental problems. No amount of propaganda, no Saatchi and Saatchi billboard campaigns, no selective use of statistics and no U-turns could disguise the fact that the Government offer the country only drift, which is damaging our national interests. They no longer have any purpose or direction in solving the problems we face.
	Nothing now can be sorted out by these men and women...They should do now what they should have done long ago: they should put their record of failure before the British people, and face a general election which they will lose.[ Official Report, 30 October 1996; Vol. 284, c. 668-69.]

Peter Hain: The hon. Member for Epsom and Ewell (Chris Grayling) made a speech of typical bluster, uncosted spending commitments and what sounded suspiciously like an intention to vote against the pensions Bill and to abolish pension credit.
	First, I congratulate my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) on moving the Loyal Address. He made a typically pugnacious and witty speech, such as we have come to expect from him.
	After five days of debate on the Queen's Speech, the Opposition have tried desperately to assert that they would be so much better in government next time than they were last time. Yes, last time they allowed inflation to reach 9.5 per cent. They raised interest rates to a full 15 per cent. They managed to push the claimant count up to 3 million. They tripled the numbers of those on incapacity benefit and cemented the sick note into the foundations of the British economy. They left one in three children in poverty, which was the worst of almost every industrialised country. They left 1 million more pensioners in relative poverty than there are today. However, that was then. The Opposition promise that they will be better now. They will not, because they cannot. Fundamentally, they have not changed because they cannot. They are still peddling uncosted promises to spend more and tax less, magically all at once. Those are the same old failed policies all over again: boom and bust is in the Tory DNA.
	Only Labour recognises the long-term challenges facing the country, and only Labour has set the policies to meet them. They are policies of economic stability to produce unprecedented year-on-year economic growth, to anchor inflation at 2 per cent. and to produce the lowest mortgage rates since the 1950s. Those policies have put 29.2 million people in work, more than ever before, with 2.8 million more people in jobs than in 1997. They have caused the number of those on jobseeker's allowance and the number of lone parents on income support to come down. For the first time in two decades, the number of those on incapacity benefit has fallen. One million claimants have come off key out-of-work benefits since 1997 and more are coming off benefit and going into work every day.
	That shows concrete, credible Labour success against Tory failure in the past and shallow Tory spin today. For the first time, we can aim at genuine full employment, defined not just by low unemployment but by high employment based on radical reductions in the benefit mountain that we inherited from the Tories. Yes, there will be thousands more opportunities for British benefit claimants to become British workers by taking British jobs.
	I welcome the speech made by the hon. Member for Falmouth and Camborne (Julia Goldsworthy), perhaps her first in her position. I have to point out, gently, that her speech was mainly distinguished by being pole-axed by my hon. Friend the Member for Vale of Clwyd (Chris Ruane), whose question she completely failed to answer. I wonder whether her critique of means-testing means that she is opposed to the pension credit. I caution the hon. Lady about advocating a local income tax as it completely stymied her colleague, the former Member for Guildford, who unsuccessfully advocated that policy against the Tories at the last election.
	I thank my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) for his praise for a good Queen's Speech, as he called itafter making a number of other points.
	I was interested in the contribution of the hon. Member for Stratford-on-Avon (Mr. Maples), especially his interesting points about Northern Rock. He said that he had a lot of sympathy with my right hon. Friend the Chancellor and with the Governor of the Bank of England, not least because the hon. Gentleman is one of the few Members to have gone through a similar experience, when he was in government in the 1990s. His speech contrasted starkly with the glib opportunism and shallowness of the shadow Chancellor whose posturing attacks over Northern Rock have cut absolutely no ice in the City or with the electorate.

John Redwood: Will the Secretary of State clear up something that the Chancellor was unable to explain earlier? Where did the 23 billion come from that the Government's wholly owned subsidiary, the Bank of England, was able to produce, and how will it be accounted for in the Government accounts?

Peter Hain: The Chancellor explained the positionit comes from the Bank of England.
	My hon. Friend the Member for Coventry, North-West (Mr. Robinson) made some points about the importance of skills and apprenticeships. He was absolutely spot-on when he said that we need a major cultural shift to make sure that vocational qualifications have the same status as academic ones. The Government completely agree.
	The hon. Member for Eastbourne (Mr. Waterson) spoke from the Back Benches, although he has now resumed his place on the Front Bench. He made a thoughtful speech about pensions. He said that he favoured consensus but he would not give the Government a blank cheque. That is a fair point. His comments contrasted with the headline-grabbing rhetoric of his colleague, the hon. Member for Epsom and Ewell. I am grateful to the hon. Member for Eastbourne for his supportive comments on the deregulatory review. As he says, we need a secure future for defined benefit schemes.
	My hon. Friend the Member for Worsley (Barbara Keeley) was rightly concerned about gender segregation. She referred to the problems in apprenticeships, where young girls are encouraged to go for hairdressing rather than taking greater opportunities for higher-paying jobs such as plumbing or engineering.
	I compliment my hon. Friend the Member for South Derbyshire (Mr. Todd) on his well-informed points about risk-based understanding of regulation. My hon. Friend the Member for Bassetlaw (John Mann) made a devastating exposure of mistaken Tory criticism of Labour Budgets and policies, to which the shadow Chancellor should have listened, had he been in the Chamber. My hon. Friend speaks with real authority on the problems of drugs and welfare dependency, and our legacy from 18 years of miserable Tory rule.
	When the hon. Member for Preseli Pembrokeshire (Mr. Crabb) spoke about his constituency, it was completely unrecognisable. I remember Pembrokeshire during the early 1990s. I remember an economy devastated by Conservative policies, but it has now been rescued and Pembrokeshire is one of the best-performing small business areas anywhere in the UK.
	My hon. Friend the Member for Northampton, North (Ms Keeble) made some good points about 16 and 17-year-olds in the NEET categorynot in education, employment or training. That is why we have announced a fast-track programme to get 16, 17 and 18-year-old youngsters into jobs or job preparation schemes as soon as possible.
	On youth unemployment, the claimant count for 18 to 24-year-olds has gone down by 146,000 since we came to power. I remember the massive mountain of young people with no hope of a job under the Tories. We have put that right.
	The hon. Members for Northampton, South (Mr. Binley) and for Ludlow (Mr. Dunne) made a number of points about capital gains tax. At 18 per cent. we have one of the lowest rates of capital gains tax anywhere in the world; it is very competitive and half the headline rate we inherited from the Tories.
	Whereas the Tories stand for injustice and tax cuts for a few super-rich, the Government stand for social justice and fair taxes for all. Nowhere is the dividing line between Labour justice and Tory injustice starker than on welfare reform. Where our policies are the envy of the world, the Tories are now promising to import the failed American model of Wisconsinas was advocated by the hon. Members for Epsom and Ewell and for Peterborough (Mr. Jackson)where welfare reform had lone mothers working or training when their children were 12 weeks old. The Wisconsin model of welfare reform resulted in rising poverty and had a worryingly disproportionate impact on black and Hispanic communities. The Wisconsin model was also plagued by fraud, which shovelled thousands on to long-term sick and disability benefits and delivered a real reduction in benefit claimants of only 15 per cent.a smaller reduction than we have delivered as a Labour Government since 1997. The Tories can have Wisconsin. We will stick by our commitment to full employment and reducing benefit dependency, while eradicating child poverty by 2020.
	We will also stick by our commitment to justice for pensioners, including those robbed of their pensions, with assistance under the finance assistance scheme. Given the challenge of an ageing society, we are committed to a new pensions settlement that will last for future generations. We have already introduced changes to reform and simplify the state pensions system, re-linking the state pension with earnings to limit means-testing and securing justice in pensions for women and carers. Now, through the pensions Bill, we will introduce a new system of low-cost personal accounts for millions of people currently without a workplace pension, with employers auto-enrolling workers into workplace pensions and a minimum compulsory employer contribution.
	If this new settlement is to last, it must be based on a broad consensus, encompassing individuals, employers and the Government and spanning the party political divide. Yet just as everyone thought that that consensus had been won, the hon. Member for Epsom and Ewell broke with the position advocated by his predecessor and declared that he is willing to wreck that consensus, thus risking misery for the 7 million people who are currently not saving enough. His position has caused widespread dismay, from the TUC to Age Concern, Help the Aged, the Equality and Human Rights Commission, the National Association of Pension Funds, the Engineering Employers Federation and the CBI. As they all recognise, that consensus
	has been hard won, and should not lightly be thrown away.
	I urge the hon. Gentleman to reconsider his position.

Chris Grayling: Will the right hon. Gentleman give way?

Peter Hain: I do not have time.
	It is becoming increasingly clear that the Conservative party has been reverting to type on a whole range of issues. The right hon. Member for Witney (Mr. Cameron) is articulate, but I fear that the former prospective Tory Member for Halesowen and Rowley Regis is authentic. We should not be surprised. They have not changed. Under the Cameron respray are the same old Tories, handing 1 billion of inheritance tax savings to a handful of the super-rich, while taking the dubious, dodgy millions from Lord Ashcroft to try to buy votes in marginal seats.
	We are the Government of change: change for a Britain of rising prosperity, more social justice and rock-solid economic stability, with better pensions, more houses, secure energy, higher employment, a boost for youth services funding and being tough on security, replacing a failed Tory Child Support Agency and giving new opportunities to 16 and 17-year-olds to remain in education until they reach the age of 18, go into full-time training or employment. All those opportunities and more were provided by the policies set out in the Queen's Speech. We are the Government who are putting forward a series of major reforms and changes that we will take forward in the coming parliamentary Session. The Queen's Speech sets us on that path for change, and I commend it to the House.

Question put , That the amendment be made:
	 The House divided: Ayes 240, Noes 309.

Question accordingly negatived.
	 Amendment proposed, at the end of the Question, to add:
	but humbly regret that the Gracious Speech fails to announce proposals for a referendum on the United Kingdom's continued membership of the European Union. [Dr. Cable.]
	 Question put forthwith, pursuant to Standing Order No. 33 (Calling of amendments at end of debate), That the amendment be made:
	 The House divided: Ayes 68, Noes 464.

Question accordingly negatived.
	 Main Question put:
	 The House divided: Ayes 304, Noes 234.

Question accordingly agreed to.
	 Resolved,
	That an humble Address be presented to Her Majesty, as follows:
	Most Gracious Sovereign.
	We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
	 To be presented by Privy Councillors or Members of Her Majesty's Household.

BUSINESS OF THE HOUSE

Ordered,
	That Private Members' Bills shall have precedence over Government business on 25th January; 1st, 22nd and 29th February; 7th and 14th March; 25th April; 9th and 16th May; 6th, 13th and 20th June and 17th October 2008. [Tony Cunningham.]

DELEGATED LEGISLATION

Ordered,
	That the Guidance issued under section 182 of the Licensing Act 2003, which was laid before this House on 28th June, in the last Session of Parliament, be referred to a Delegated Legislation Committee. [Tony Cunningham.]

Michael Penning: On a point of order, Mr. Speaker, which I informed the Chair earlier that I would raise. On today's Order Paper are four written ministerial statements that the Government indicated they would lay before the House. Two appeared in the Vote Office at about 1 pm, but the other two have failed to appear there.
	I understand that all four statements are available in the Press Gallery. While I fully appreciate that Her Majesty's press should see ministerial statements, surely they should be available to the House. I realise that they are valuable in the Library, but how can it be right for the Vote Office to have only two of them, given that they concern important subjects such as aviation security and flood recovery? I wonder whether you could advise me, Mr. Speaker, on how the House could arrange for all the statements to be delivered to the Vote Office.

Mr. Speaker: I thank the hon. Gentleman for giving me notice of his point of order.
	My information is that all four ministerial statements were available in the Library shortly after 1 pm. That is well within the guidelines for written ministerial statements. If the hon. Gentleman's complaint is that two of the statements were not available in the Vote Office, I suggest that he take the matter up with the Leader of the House. She is on call tomorrow, and perhaps I will catch his eye.

Petition
	  
	Post Office Closures (Nottingham)

John Heppell: I beg leave to present the petition of Rebecca Anderson on behalf of the customers of Carrington post office, Nottingham. They are my constituents, who are surprised that the selection criteria for post office branches should mean that a popular, profitable and highly performing branch should be selected for closure, especially when there is no realistic alternative.
	The petition states:
	The Petition of Rebecca Anderson on behalf of the customers of Carrington Post Office, Nottingham,
	Declares that the selection criteria of Post Office branches that are proposed for closure have not taken into account the economic and social impact these closures will effect. This has resulted in one of the top 25 performing branches in the Nottingham area being proposed for closure. Each proposed branch should be comprehensively and accurately assessed. The Petitioners have evidence that this has not been done so far.
	The Petitioners therefore request that the House of Commons urge the Government to review the restructuring process with Post Office Ltd with a view to protecting commercially viable branches from being closed; and further urge the Government to ask Post Office Ltd to enter in public meetings where these are requested by the local communities.
	And the Petitioners remain, etc.
	[P000050]

HM SUBMARINE AFFRAY

Motion made, and Question proposed, That this House do now adjourn. [Tony Cunningham.]

John McDonnell: The story of the tragedy of Her Majesty's submarine Affray begins on 16 April 1951, when she made her way into the English channel with 75 officers and ratings on board, dived, and never again resurfaced. To this day questions remain about why the Affray was lost. Not knowing what happens still lies heavily on the surviving families of her crew, who bear to this day, 56 years later, the sadness and sense of loss suffered when their loved ones failed to return home.
	One of those families was that of Able Seaman Georgeknown as GingerLeakey, who lived in the Hayes constituency. He joined the Royal Navy in 1945 and a year later volunteered to serve on submarines. It is a tragic irony that he was never meant to sail on the Affray that day. He was on official shore leave visiting his wife Eileen who was expecting their second child. However, he received an urgent telegram summoning him back to his boat as another member of the crew had been judged unfit to serve. The daughter whom Able Seaman Leakey would never see is my constituent, Mrs. Georgina Gander, who has joined us in Parliament today to witness this evening's debate.
	The purpose of the debate is to seek answers to the questions that Mrs. Gander and others still ask about the reasons for the loss of the Affray. She and I are indebted to the research undertaken by the journalist and author Alan Gallop, whose research into this incident has recently been published in the book Subsmash.
	HM Submarine Affray was an A-class submarine completed by Cammell Laird for the Royal Navy and accepted into service in May 1946. The A-class subs were built for service in distant conflicts such as the far east. They could dive to a depth of 500 ft and deeper if necessary without risk of their hull collapsing. They accommodated a crew of up to 61 in peacetime and 66 in wartime conditions.
	From the outset it appears from the records that the Affray was beset with mechanical problems that disrupted her service, including a battery that flooded without warning during trials, a further new battery being required four months after the Affray's being accepted into service, defects in a starboard supercharger and air compressor when en route to Australia, excessive wear found to the astern bushes requiring work in dock in Sydney and Colombo, and a partial refit needed in Singapore.
	By 1950, the submarine had sailed 51,000 miles across the globe. She has been described as an exhausted boat, badly in need of substantial repairs. On 8 May 1950, she entered Portsmouth dockyard for a major refit. During the period in Portsmouth, experienced crew expressed serious concerns about the Affray's mechanical and structural condition. Chief Petty Officer David Bennington wrote to his father:
	As far as I can see these engines have had their time...I shouldn't be surprised if this boat pays off and went into reserve.
	After one exercise he describes how
	one engine fell over
	that is, broke down
	and we limped in on one and just as we arrived in the other one went...I think that this boat is just about finished.
	Another time he wrote:
	She leaks like a sieve and when doing a deep dive the other day the water poured into the engine room faster than we could keep it out, so we had to surface with all speed.
	In January 1950, a snort mast was fitted to the Affray. That device was a long steel tube fitted to the hull serving as a snorkel which when raised allowed the submarine to increase the amount of time it could remain under water. The mast had a head valve at its top to prevent the entry of sea water when raised and a large valve where that induction system entered the sub's engine room. Leading stoker mechanic William Day was responsible for raising and lowering the snort mast. He listed defects encountered on exercise, saying that
	as soon as we surfaced from snorting there was always a lot of water in the engine.
	During the refit at Portsmouth there were reported hostilities between the non-naval staff working on the sub and service personnel, and repair and maintenance work took longer than expected. There were excessive delays. During that time, oil was also found to be leaking into a battery tank.
	During that period, Lieutenant Commander John Blackburn was given command of the Affray in January 1951. He received orders on 3 April that his sub would put to sea at 1700 hours on Monday 16 April for a week-long practice war patrol in the English channel. The exercise was code-named Exercise Training Spring. The aim of the exercise was to provide trainee executive and executive officers with submarine experience at sea under wartime conditions. The sub would also carry a small number of commando cadets from the Royal Marine amphibious school at Eastney.
	The crew of the Affray worked long hours to overcome engine problems and to prepare the sub for sea by that deadline. Nevertheless, there were still concerns about its seaworthiness. First Officer Lieutenant Derek Foster shared his fears with his wife. She reported later:
	He said he didn't want to go to sea on Monday as the submarine wasn't seaworthy.
	Despite that, on 10 April the submarine was given an updated safety certificate and ordered to sea on 11 April to test its main engines. Only half the crew were taking part, with a further 10 drawn from reserve or spare crews. No defects were found after four hours at sea, except that the yellow indicator buoy which floats to the surface as a marker in the even of sinking had come adrift. Its hatch was later secured with wire. Doubts still continued about the seaworthiness of the sub. Sergeant Jack Andrews, one of the Marines who were to be the passengers on the Affray, expressed to his brother the night before sailing that he was far from happy about taking passage on it.
	A crew of 85 officers and ratings were summoned to join the Affray on Monday 16 April, 23 more than normally carried in peacetime. Twenty-five of them joined the boat for the first time. They had no experience of working together. Thirteen ratings were then discharged because of shortage of space. Able Seaman Edward Hickman, a member of the Affray's crew, commented of the crew:
	90 per cent. knew nothing about the boat. The old crew came off and it was more or less a new crew that was preparing to take her out.
	At 1700 hours on 16 April the Affray slipped its mooring and headed for the English channel. It was last sighted near the entrance to Portsmouth harbour passing south-easterly. At 2056 hours its captain signalled that he was diving at 2115 hours for Exercise Training Spring. That was the last signal received from the Affray.
	The sub was due to send an on-the-surface signal the following morning17 Aprilbetween 0800 hours and 10 am. By 10.40 am, nothing had been received and at 10.45 am Captain Brown of the Submarine Flotilla alerted his flag-officer, Rear-Admiral Sidney Raw, about his anxiety for the boat's safety. Initially, it was thought that the sub was experiencing a radio transmitter problem, but by 1100 hours Rear-Admiral Raw transmitted an urgent messageSubsmash Oneindicating that the safety of the Affray was in doubt. That was an immediate call to action, signalling ships and aircraft to begin the search for the Affray.
	Repeated emergency signals were sent to the Affray, but with no response. By 1255 hours every ship in the home fleet flotilla had been summoned to join the air and sea search, including the Reclaim, which was the Navy's only deep-diving and submarine rescue vessel. Foreign ships also joined to assist in the search for the Affray.
	At 2155 hours the submarine Sirdar reported that it had picked up faint signals on its ASDIC sonar listening device in the vicinity of the Affray's diving position. Hopes were raised, but they were soon dashed when no response was received from charges sent overboard to encourage any survivors to attempt escapethat was the normal procedure for signalling that ships were ready to lift any escapees from the water. The search went on, and James Callaghanthen Parliamentary Secretary to the Admiralty, and later Prime Ministerreported to this House that over 40 surface ships and seven submarines were taking part, but with no success.
	At 1945 hours on Thursday 19 April, 69 hours after the Affray had dived for the last time, the emergency signal Subsmash was cancelled. Rear-Admiral Raw said in a message to the Admiralty:
	The disappearance of HMS Affray is a complete mystery...not a trace of her was sighted...The cause of the disaster must have been an accident; it could not have resulted from any inherent defect in material or design.
	A limited search continued and eventually, in June, after a sweep of the sea bottom with sonar equipment and with the use of a newly invented underwater television device, the sub was found a considerable distance from where earlier soundings had identified, in an area that had been swept earlier in the initial search and rescue. All the visual evidence pointed to the fact that whatever happened to the Affray occurred very quickly, taking her crew by surprise. The snort mast was snapped off. Divers eventually raised the broken snort mast from the sea bed.
	A board of inquiry set up by the Navy to investigate the loss of the Affray heard evidence that the snapping of the snort mask resulted from metal fatigue and poor welding. The inquiry was held in secret and its papers were released only under the 30-year rule. The board followed closely the conclusions already reached by the Admiralty's First Sea Lord and Commander-in-Chief, dismissing other theories of mechanical failure, or human or drill error.
	The snort mast theory could have been proved by ascertaining whether there had been an attempt to shut off the induction valve fitted at the point where the snort entered the hull. If that was shut, the snort would not be responsible and another cause would need to be considered, possibly internal explosion. However, the site of the boat was inaccessible, and with the boat shifting it was thought too dangerous for divers to inspect.
	Doubts quickly began to emerge within the Admiralty about the snort mast theory. Some officers thought that the board had closed its eyes too quickly to other possible causes and that the theory could not be reconciled with the lack of assessed external damage to the hull of the sub. The failure to allow for the working up training of the crew pointed to a possible drill failure. Why any material failure should occur as it did was also not explained. Discussion took place with the Minister concerned over whether the sub should be raised, but that was dismissed as too difficult and costly. It was stated in Parliament that the relatives unanimously did not want the sub disturbed, but relatives later confirmed that they had never been consulted on the matter.
	In November 1951, in a statement to Parliament, James Thomas, the then new First Lord of the Admiralty, concluded:
	there is insufficient evidence to enable me to say...why 'Affray' was lost.[ Official Report, 14 November 1951; Vol. 493, c. 980.]
	He explained the snort theory and the possibility of a major battery explosion, which could also have been linked to a crack in the snort mast. He confirmed that the risk of failure precluded attempts to raise the sub.
	The Navy, using HMS Reclaim's divers, attempted various methods to check the snort theory, including the use of what were, at that time, primitive X-ray devices, but with no success. Continuing concerns were expressed in the Admiralty about why the Affray was sent to sea with a crew that had not been given time for working up after a protracted refit. We now know that a letter marked private and confidential was issued to Captain Hugh Browne, captain of the 5th Submarine Flotilla, which stated:
	you made an error of judgement in sailing Affray with a training crew and folboat party embarked on a training patrol before she had been given the opportunity for the working up which was clearly desirable after her protracted refit and the many changes in her crew.
	This letter was never made public at the time, and has been discovered only recently.
	The Navy then closed its file on the Affray. Nobody took responsibility for allowing the Affray to put to sea in circumstances considered by naval staff to have been unacceptable. However, for more than 50 years questions over the Affray have not gone away, especially for the remaining relatives. The central question, of course, is why was the Affray lost. The snort mast failure theory could be resolved using today's technology to examine the sunken sub in order to determine whether the valve at the base of the snort mast was in an open or closed position. However, in 2001, the Government designated the Affray as a protected site and announced a ban on diving in order to protect the Affray and other sunken ships from disturbance by trophy huntersthat measure was supported by all across the House. Nevertheless, exceptions have been made, to enable the recovery of bullion from HMS Sussex, for example. Mounting an official dive on Affray could assist in shedding light on what happened to the boat and help in providing closure for the remaining relatives.
	A disaster appeal was launched at the time of the loss of the sub by the mayors of Portsmouth and Gosport and it gained huge support across the country and raised more than 170,000 for the relatives of the crew. That has been disbursed over the years in supporting the families. The HM Submarine Affray disaster relief fund trust remains active, but it is not publicly known how much is left in the fund and all queries to the trustees are referred to the Official Solicitor at the Public Trustee Office. No information has been forthcoming. The few remaining relatives still receive very small amounts of financial support. It is their view that any funds left should now be distributed to the relatives for whom they were originally intended and/or given to naval charities for similar deserving cases.
	I have raised several issues in this debate to which it is clearly beyond the ability of a Minister to respond in a brief, time-limited Adjournment debate. I ask the Minister, therefore, if he would agree to meet me, other interested hon. Members and the Affray relatives so that we can discuss the issues, allow the relatives to express their views and examine whether we can seek further evidence to determine what happened to those who lost their lives on board Affray. In my view, we owe nothing less to the memory of those who lost their lives so tragically in the service of their country.

Bob Ainsworth: I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this debate on the loss of HMS Affray in April 1951, and I acknowledge his concerns for his constituent who lost her father in that tragedy.
	As my hon. Friend said, HM Submarine Affray was an A-class submarine completed in 1946. The class had originally been designed for operations in the far east during the latter part of the second world war. The submarine used a diesel-electric power plant, with diesel engines being used for surface propulsion and charging of the batteries. The batteries powered electric motors for underwater propulsion.
	Some time after completion, Affray was fitted with a snort mast. That was a tube whose head was above water permitting the submarine to run its diesel engines while at periscope depth, reducing the chances of it being detected by surface ships or from the air.
	On 16 April 1951, Affray left Gosport on a training exercise. As well as most of her normal crew, she was carrying a training class of officers and some Royal Marines in training. My hon. Friend referred to that issue. While the captain was censured for allowing Affray to sail with officers under training and Royal Marines on board, there was no evidence that the crew was inexperienced in submarine operations. The judge of whether a ship is safe to go to sea has to be the commanding officer. In that case, he was an experienced and decorated submariner and the captain of the 5th Submarine Flotilla.
	The submarine was scheduled to carry out a series of exercises. She was scheduled to make a surfacing report by radio at 1000 hours on 17 April. That signal was not received and consequently Operation Subsmash was ordered in accordance with standard submarine search and rescue procedure. That began at 1100 hours on the same day. Over the next few days, many ships and aircraft were involved in the search for Affray, to no effect.
	Some weeks later, the wreck was detected and identified north of the Channel islands, lying in 260 ft of water. In the succeeding months, the diving tender HMS Reclaim dived on the wreck in an attempt to discover the reasons for her loss. One of the discoveries made was that the Affray's snort mast had broken off and that that might be connected to her loss.
	A board of inquiry was convened under the presidency of Rear-Admiral R. M. Dick. It presented its interim finding to the Commander-in-Chief, Portsmouth, Admiral Sir Arthur Power, on 19 July 1951. He forwarded that finding to the First Sea Lord, Admiral of the Fleet Lord Fraser, on the same day.
	The board considered a number of possible causes for the loss, including battery explosion, material failures, operating errors, mines and collision. Of these, material failure was considered the most likely immediate cause.
	The board of inquiry therefore concluded, with the reservation that
	certain technical evidence and calculations will need further checking,
	that the submarine was lost due to the sudden snapping of the snort mast. It determined that that was caused by a material failure resulting from the mast's brittle condition, that the submarine was overwhelmed by the resultant rapid flooding, and that death would have come very quickly to the crew.
	The Board of Admiralty signalled the Commander-in-Chief, Portsmouth, on 24 July that it was by no means as certain of the cause of the loss. It asked that further diving work be carried out on the wreck to try and establish why the Affray went down. Further efforts were made but, even so, no firm conclusions could be reached and diving was abandoned in early November 1951.

John McDonnell: I thank my right hon. Friend for giving way, but I should like to put it on the record that the error of judgment identified by Captain Hugh Browne was never reported by the board of inquiry to Ministers, and then on to this House.

Bob Ainsworth: I am not sure what my hon. Friend means by his reference to an error of judgment. Perhaps we need to talk about that matter outside the House.
	A particular point to which the investigations were directed was to ascertain the position of the snort induction valve since, as my hon. Friend pointed out, that would have confirmed whether the Affray was actually using the snort mast at the time of the accident.
	Meanwhile, the board of inquiry made its final report on 6 August 1951, and its conclusions were broadly similar to those of the interim inquiry. The report found that the submarine was lost because of the material failure of the snort mast, which broke off without warning. The resultant rapid influx of water resulted in the submarine dipping markedly by the stern, becoming increasingly heavy and sinking to the bottom.
	The board of inquiry report stated that the rapidity of events did not allow the release of position indication signals. It believed that the crew died rapidly, that the submarine was materially sound and that the crew had confidence in her and her captain. Finally, the report stated that the search organisation was rapidly and energetically implemented.
	On 14 November 1951, the First Lord of the AdmiraltyMr. J.P.L. Thomas, the then political head of the Royal Navymade a statement to the House. He noted that there was no certainty as to the reasons for the loss of the Affray, although the broken snort mast might be either cause or consequence. He also stated that any attempted salvage of the Affray would take up large resources, that it might not be successful and that it would put other lives at risk. He said that he had therefore decided that no such attempt should be made. An obvious consequence of that was that any recovery of bodies could not be prudently undertaken.
	I am aware of the recently published book about the loss of the Affray, and of the suggestions that it makes. A study of those suggestions has been carried out by the naval historical branch, and it has been concluded that there is no reason to disagree with the findings of the board of inquiry.
	One suggestion made in the book is that somehow there was collusion between the First Sea Lord and the Commander-in-Chief, Portsmouth, while the board was still sitting. The contention is that those individuals had decided to find that the loss was due entirely to the fractured snort mast and that the outcome of that collusion was relayed to the board. However, that directly contradicts the doubt expressed by those same people about the reasons for the tragic accident, and the fact that they ordered further diving to be carried out in an attempt to ascertain more information. The allegation of collusion does not stand up and there appears to be no documentary evidence that such collusion took place.
	In 2002, the remains of the Affray were designated as a controlled site under the Protection of Military Remains Act 1986. In consequence, no diving or other underwater operations may take place within a defined zone around the wreck without the prior authorisation of the Secretary of State for Defence.
	Submarines of the same class as Affray have been out of service for more than three decades, and no diesel-electric submarines have been in Royal Navy service for several years. The subsequent safety record of the Royal Navy submarine service has been excellent; indeed, Affray was the last submarine lost at sea. A submarine is a complex ship operating in an environment that is intrinsically hostile, even in peacetime.
	Although it is deeply regrettable that the Affray accident resulted in such severe loss of life, including that of the father of my hon. Friend's constituent, I do not think reopening the investigation will give scope for learning significant lessons today. I hear what my hon. Friend says, but we have to balance the potential for gain in reopening the investigation with the intrusion on what is, in effect, a military grave.
	I shall consider my hon. Friend's request for a meeting, but I do not want to appear cruel or callous so I do not want to hold out hope that I am minded to reopen the investigation. After such a huge length of time, I really do not think that there is reason to do so. I shall talk to my hon. Friend after the debate about the point he raised in his intervention and will try to understand it further. I shall reflect on his request for a meeting but I do not want to promise it at this stage.

John McDonnell: May I suggest to my right hon. Friend that the meeting would be to outline the continuing concerns of a number of relatives about what happened to the Affray and about the subsequent investigation? It is not a formal request to reopen the board of inquiry, although it may involve a request that divers are facilitated with new, modern technology to investigate the sunken sub so that we can have complete clarity for the relatives about what happened. There is a precedent; in the case of HMS Sussex, where bullion is buried in the wreck, permission was given. If permission was given in the case of the Affray, it would obviously be with full consultation with all the relatives, bearing in mind the number of their relatives in the sub.

Bob Ainsworth: The Sussex is not a designated site so it is not a precedent.
	 The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker  adjourned the House without Question put, pursuant to the Standing Order.
	 Adjourned at Thirteen minutes past Eight o'clock.